Boise first-lien softens on amendment; MGM Mirage dips; Ford, Rite Aid down with sales results

By Sara Rosenberg

New York, Oct. 1 - Boise Inc.'s first-lien term loan headed downwards on Thursday, moving closer to par as the company launched an amendment that, among other things, would require a partial paydown of the debt.

In more trading happenings, MGM Mirage's term loan was softer after the company canceled its debt exchange offer, the bank debt of Ford Motor Co. and Rite Aid Corp. weakened as both companies came out with sales numbers, and FairPoint Communications Inc.'s term loan was lower with missed interest payment news.

Boise first lien trades down

Boise's first-lien term loan gave up some ground during the trading session with the announcement of an amendment proposal that includes plans for a mandatory $75 million prepayment of the loan at par, according to a trader.

The first-lien term loan was quoted at par ½ bid, 102 offered, down from 102 bid, 103 offered, the trader said.

Meanwhile, the company's second-lien term loan didn't really trade, but the trader said it is probably valued at 113 since the amendment would allow for the repayment of the loan at that price. On Wednesday, the second-lien was quoted at 97 bid, par offered.

Funds for the second-lien loan tender would come from up to $300 million of new unsecured debt, which the company is asking bank lenders for permission to sell through the amendment that was launched on Thursday, and cash on hand.

The new unsecured debt and cash on hand would also be used to retire $74.8 million of a seller's note at a price of 70.

Boise seeking covenant changes

In addition to the repayment/refinancing plans, Boise's amendment is also looking to modify covenants under the first- and the second-lien credit facility.

Under the first-lien amendment, a new first-lien leverage ratio of 3.25 times would be added, the total net debt leverage ratio would be changed to 4.75 times through maturity, unsecured debt incurrence of up to 4.25 times would be permitted, and prepayments of junior debt with the company's portion of excess cash flow would be allowed, subject to a first-lien leverage ratio test of 2.0 times.

The first-lien amendment would also increase the 2009 excess cash flow sweep to 50% from 25%.

Under the second-lien amendment, the total net debt leverage ratio would be changed to 5.0 times through maturity and prepayments of junior debt would be allowed with the company's portion of excess cash flow.

First-lien lenders are being offered a 25 basis point amendment fee.

In order for the amendment to pass, the company is required to receive a simple majority vote of both the first- and the second-lien lenders.

Boise is a Boise, Idaho-based manufacturer of packaging and paper products.

MGM Mirage slides

MGM Mirage's term loan was lower on Thursday as the company announced that it terminated its debt exchange offer due to lack of participation by noteholders. The overall cash loan market, however, was down by around three-quarters to a full point, so that could have been the reason for the softening as well, according to traders.

The term loan was quoted by one trader at 91 bid, 92 offered, down from 91¼ bid, 92¼ offered and by a second trader at 90½ bid, 92 offered, down on the bid side from 91½ bid, 92 offered.

The company had been offering to exchange a portion of its $782 million of 8.50% senior notes due 2010 for 10% senior notes due 2016.

The exchange offer was subject to a minimum condition that no less than $25 million of new notes be issued for existing notes.

As of the Sept. 30 expiration date, there were about $9.12 million of existing notes validly tendered, which, if accepted, would have been exchanged for about $10.72 million of new notes.

MGM Mirage is a Las Vegas-based gaming, hospitality and entertainment company.

Ford weakens with sales

Ford's term loan was also down in trading as the company released September sales results, and the overall market tone didn't help matters, according to traders.

The term loan was quoted by traders at 88 bid, 89 offered, down from 88½ bid, 89½ offered.

One trader remarked that the movement could have been more market driven than credit specific, but "it's hard to tell on a day like today."

For the month of September, total Ford sales were 114,655, down 5.1% from 120,788 in September 2008.

Total car sales for the month were 38,890, down 3.9% from 40,453 last year.

And, total truck sales were 71,049, down 6.9% from 76,281 in the prior year.

Ford is a Dearborn, Mich.-based automotive company.

Rite Aid loans lower

Another company to reveal September sales results on Thursday was Rite Aid, and its new term loan was also softer with the news, according to a trader.

The new term loan was quoted at 94½ bid, 95½ offered, down from 94¾ bid, 95¾ offered, the trader said.

The company's old term loan, however, was unchanged on the day at 87½ bid, 88½ offered, the trader added.

For the month of September, Rite Aid's same store sales decreased 0.3% over the prior-year period.

Front-end same store sales decreased 2.3% during the month, while pharmacy same store sales increased 0.7%.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

FairPoint slips as payments missed

FairPoint Communications' term loan lost some ground during trading hours as the company announced that it did not make a $28 million interest payment that was due on its credit facility on Sept. 30, according to traders.

The term loan was quoted by one trader at 75 bid, 76 offered, down from 75½ bid, 77 offered and by a second trader at 74½ bid, 76½ offered, down from 75 bid, 77 offered.

The missed payment constitutes an event of default, and, therefore, the company entered into a forbearance agreement with lenders that is in effect through Oct. 30.

Even with the forbearance, pricing on the credit facility is increasing by 200 basis points as a result of the default.

FairPoint is a Charlotte, N.C.-based provider of communications services.

Stream closes

In other news, Stream Global Services Inc. closed on its $100 million asset-based revolving credit facility, according to a news release.

Wells Fargo Foothill led the deal and is the agent. Other lenders include Goldman Sachs Lending Partners LLC, Morgan Stanley Senior Funding Inc. and Royal Bank of Canada.

Completing the revolver was one of the conditions of a $200 million 11.25% senior secured notes offering that the company priced at 95.454%.

Another condition of the notes was the closing of the previously announced combination with eTelecare Global Solutions Inc., which took place on Thursday as well.

Proceeds from the notes were used to refinance the debt of Stream and eTelecare and for general corporate purposes.

Stream is a Wellesley, Mass.-based provider of customer relationship management and other business process outsourcing services.

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