New-issue leveraged loan activity pushed further into record territory during the month. The S&P/LSTA Index posted a 0.49%. The universe of S&P/LSTA Index loans grew by $22 billion, to a record $674 billion. Inflows accelerated. The loan default rate eased.
Looking ahead, the calendar of new M&A-driven transactions remains light.
This month LCD looks at:
Leveraged loan volume; M&A loan volume
Average Bid of S&P/LSTA Loan Index
S&P/LSTA Index Loans Outstanding
Average New-Issue Clearing Yield of First Lien Loans
The union representing drivers for Atlantic Express on Wednesday night rejected a proposal from the company that would have reduced employee wages, according to a Dec. 6 online report from School Transportation News. The company has said it needs to lower its wages in order to compete for contracts in New York City.
The rejection of the proposal by the Amalgamated Transit Union 1181-1061, AFL-CIO means that Atlantic Express will cease operations and move forward with its planned asset sales.
At the time the company filed for Chapter 11 on Nov. 5, Atlantic Express said it would “use the Chapter 11 process to explore the availability of additional debt or equity financing, market its assets for sale and continue its challenging labor negotiations for a new collective bargaining agreement,” adding that it would pursue an asset sale if it was “unable to reach agreement with [the union representing its employees] on a new collective-bargaining agreement and obtain additional financing.”
The bankruptcy court overseeing the company’s Chapter 11 case approved bidding and sale procedures for the company’s assets in late November that set a deadline of today for submitting qualified bids. Under those procedures, if an auction is required, it is slated to be held on Dec. 11, while a hearing to approve a sale was set for Dec. 16 (see “Atlantic Express nets OK for asset sale process; bids due by Dec. 6,” LCD, Nov. 25, 2013).
As reported, the company has also said it was “confident” that some of the potential bidders currently conducting due diligence on its assets would become qualified bidders and participate in an auction. According to court filings, the company’s financial advisors have contacted more than 120 potential strategic and financial buyers, 40 of which have signed confidentiality agreements (see “Atlantic Express ‘confident’ it will see bids for its assets,” LCD, Nov. 20, 2013).
According to School Transportation News, about 2,000 Atlantic Express employees in New York City will lose their jobs as a result of the rejection of the proposal, but the majority would be eligible to be hired by other unionized companies based on seniority. –Alan Zimmerman
The sterling and euro repriced B term loans for United Biscuits have freed to trade at a mid-price of 101.5, to yield 5.02% on the sterling portion, and 4.17% on the euro piece, according to sources. The sterling TLB-1 priced at L+450, while the euro TLB-2 priced at E+400, and both tranches mature in June 2020. J.P. Morgan was active bookrunner, and Goldman Sachs was passive bookrunner. Lenders were paid a consent fee of five basis points, and the repricing closed as indicated at launch. There is also a £75 million revolver due 2018 paying L+400 in the structure, which was not repriced. United Biscuits manufactures brands including McVities, Jacobs, Penguin, and Jaffa Cakes.
With market technicals running strong in November, the average price at which first-lien institutional loans broke into the secondary market for trading advanced to a six-month high of 100.24% of par during the month, from 99.92 in October. The higher break prices also reflect the narrower issue prices on offer, with the average issue price thinning to 99.55% of par – the tightest level since May – from 99.18 in October.