Ford, GM rise as bailout approved; Integra, Cooper-Standard revised amendments pass

By Sara Rosenberg

New York, Dec. 19 - Ford Motor Co. and General Motors Corp. saw their term loans head higher in trading on Friday as the government agreed to provide some loans to General Motors and Chrysler LLC to keep the two troubled companies out of bankruptcy.

In other news, Integra Telecom Inc. saw the approval of its term loan buyback amendment after a few changes were made to the proposal and Cooper-Standard Automotive Inc.'s revised buyback amendment also netted enough consents to pass.

Ford, General Motors trade up

Ford and General Motors were both quoted higher during the trading session as President Bush decided to give $17.4 billion in loans to the auto sector so as to rescue them from their current liquidity problems, according to traders.

Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 40 bid, 42 offered, traders said. According to one trader, the debt went out on Thursday around 38½ bid, 40½ offered, and according to a second trader, the debt was up about two points on Friday versus previous levels.

Meanwhile, General Motors, a Detroit-based automaker, saw its term loan quoted by one trader at 45 bid, 47 offered, up from 42 bid, 43 offered on Thursday, and by a second trader at 46 bid, 49 offered, up from 44 bid, 47 offered on Thursday.

Under the bailout, $13.4 billion in loans will be available in December and January, with $9.4 billion of that going to General Motors and $4 billion going to Chrysler LLC. The remaining $4 billion in loans would come later, based on certain conditions.

Chrysler, a producer and seller of Chrysler, Dodge and Jeep vehicles, is not a name that gets traded very often, but one trader did say he saw some levels of 21 bid, 24 offered on Friday. He went on to say that on Thursday morning it was 16 bid, 20 offered.

General Motors to accelerate restructuring

In response to the news on Friday, General Motors said that the funds will allow for the acceleration of its aggressive restructuring plan, and that it plans to provide regular updates on its progress.

The company continued by saying that it appreciates "the president extending a financial bridge at this most critical time for the U.S. auto industry and our nation's economy.

"This action helps to preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us," the company's news release added.

Cerberus to provide $2 billion to Chrysler

Cerberus Capital Management LP, the owner of Chrysler, announced on Friday that it in connection with the loan from the government, it has agreed to use the first $2 billion of proceeds from Chrysler Financial to backstop the loan allocated to Chrysler automotive.

The $4 billion secured loan from the Treasury is expected to provide a bridge to the restructuring of Chrysler automotive's debt and labor agreements.

"This bridge loan will prevent an abrupt collapse of this industry, which would have a severe impact on the economy, eliminating millions of jobs throughout the country, shifting tens of billions of dollars in pension obligations to the government and slashing the nation's gross domestic product," Cerberus said in a news release.

Also, Cerberus announced that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate a restructuring of the company.

Ford happy for GM and Chrysler

Ford, although not getting immediate help under the government bailout plan, was still pleased to hear the news Friday since it helps the entire industry.

"As we told Congress, Ford is in a different position. We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," said Alan Mulally president and chief executive officer, in a news release. "But all of us at Ford appreciate the prudent step the Administration has taken to address the near-term liquidity issues of GM and Chrysler. The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy."

Recently, Ford submitted to Congress a comprehensive business plan that is hoped to return the company to pre-tax automotive profitability by 2011.

In the plan, Ford said the transformation of its North American automotive business will continue to accelerate through aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles.

In addition, Ford is asking for access to a line of credit of up to $9 billion in bridge financing, but hopes to complete its transformation without accessing the government loan.

Integra Telecom tweaks amendment, passes

In more loan happenings, Integra Telecom made some changes to its amendment request, resulting in lenders approving the deal, according to a market source.

Under the changes, the company now has 180 days to repurchase up to $200 million of its term loan debt below par, as opposed to 270 days, the source said.

In addition, the minimum buyback amount was revised to $25 million from $10 million, the source continued.

And, lenders are now being paid a 10 bps amendment fee as opposed to receiving no fee, the source added.

Deutsche Bank led the amendment process.

Integra Telecom is a Portland, Ore.-based provider of voice, data and internet communications.

Cooper-Standard approved

Also on the amendment front, Cooper-Standard Automotive's recently revised amendment proposal ended up getting enough lenders on board to make it through, according to a market source.

Under the amendment, the company can repurchase up to $150 million in term loan debt at levels below par over the course of 18 months, with a minimum buyback amount of $25 million, and lenders were paid a 5 bps fee.

Originally, the company was asking for two years to make the repurchases, a minimum buyback amount of $10 million and lenders were being offered no fee.

Deutsche Bank led the amendment process.

Cooper-Standard is a Novi, Mich., manufacturer and marketer of systems and components for the global automotive industry.

Brocade completes Foundry purchase

Brocade Communications Systems Inc. closed its acquisition of Foundry Networks for $16.50 per share in cash, according to a news release.

To help fund the transaction, Brocade got a new $1.225 billion secured credit facility (Ba2/BB+), consisting of a $125 million revolver priced at Libor plus 400 bps with a 3% Libor floor and a 50 bps commitment fee, and a $1.1 billion term loan priced at Libor plus 400 bps, with a 3% Libor floor and soft call protection of 102 in year one and 101 in year two, that was sold at an original issue discount of 961/2.

During syndication, the term loan was upsized from $1 billion, the soft call protection was added to the tranche and the original issue discount widened from 98.

Bank of America and Morgan Stanley acted as the joint lead arrangers and joint bookrunners on the credit facility, with Bank of America the administrative agent, Morgan Stanley the syndication agent, and HSBC and Keybank the co-documentation agents.

The facility was actually completed on Oct. 7, at which time the funds were deposited into a restricted Brocade custody account pending the closing of the acquisition and other release conditions.

Brocade is a San Jose, Calif., provider of data center networking services that help organizations connect, share and manage their information in the most efficient manner. Foundry is a Santa Clara, Calif., provider of high-performance enterprise and service provider switching, routing, security and web traffic management services.

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