GM, Ford freefall continues; Freescale rises; Bonten Media commitment fades away; JBS tweaks revolver

By Sara Rosenberg

New York, Oct 10 - General Motors Corp. and Ford Motor Co. both saw their term loans increasingly worsen on Friday, and Freescale Semiconductor Holdings I Ltd.'s term loan was surprisingly stronger despite cash and LCDX 10 being down once again.

In other news, Bonten Media Group Inc.'s commitment for additional term loan debt to fund an acquisition is likely not happening since the deal was going to be led by Lehman Brothers, and as a result of the turmoil in the market, the company may have a hard time finding another bank to step in.

Also on the new deal front, JBS USA downsized its ABL revolving credit facility size and increased pricing.

GM, Ford nosedive

General Motors and Ford saw things get progressively worse for their term loans on Friday, as levels have now moved into the low-to-mid 40 context, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 41½ bid, 46½ offered, down from previous levels of 47 bid, 50 offered, the trader said.

And Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 43½ bid, 48½ offered, down from previous levels of 47 bid, 50 offered, the trader added.

On Thursday, Standard & Poor's placed both General Motors' B- long-term corporate credit rating and Ford's B long-term corporate credit rating on CreditWatch with negative implications.

The rating agency said that the CreditWatch reflects the rapidly weakening state of most global automotive markets, along with capital market conditions that will remain a serious challenge for the foreseeable future.

Freescale trades up

In an unexpected move, Freescale Semiconductor's term loan actually traded higher on the day, even though everything else was down, according to a trader.

The company's term loan was quoted at 67½ bid, 69 offered around 2 p.m. ET, up from Friday morning's levels of 64 bid, 66 offered and from Thursday's closing levels of 65 bid, 67 offered, the trader said.

"When equities popped, so did Freescale and then it grinded higher," the trader remarked.

The trader added that he didn't know why the debt was higher, but that the stronger levels were real as trading did take place within that context.

Freescale Semiconductor is and Austin, Texas-based designer and manufacturer of embedded semiconductors.

Cash, LCDX slip lower

Meanwhile, the cash market in general and LCDX 10 both posted losses on Friday as the selling pressure continued to mount, according to traders.

The cash market was described by traders as probably being down two to 2½ points on the day, generically speaking, with some things maybe down a little less than that.

"Everything opened down, like, a point. Everyone wanted it to go up, but it didn't. Too much pressure," one trader said.

As for LCDX 10, at around 2 p.m. ET, levels were quoted at 82.75 bid, 83.25 offered, down from Thursday's closing levels of around 84.50 bid, 85 offered, traders remarked.

"Looks like guys are just trying to get away from this thing. That's the only reason I can think of for why it would be quoted this wide," one trader added.

Bonten financing in limbo

Switching to new deal happenings, Bonten Media's plan to get $102.5 million of new term loan debt (B1/B+) for an acquisition is in trouble as the original commitment came from Lehman Brothers, which is currently not in a position to provide the financing given its bankruptcy filing and purchase by Barclays Capital, according to a market source.

"I know of no other bank that has stepped up to provide it," the source said, regarding the financing. "Market traded way down. Cost for new bank to come in and provide financing would be so expensive, I don't think it gives the equity returns needed to strike the deal."

The source went on to say that companies with the comparable corporate credit ratings to Bonten Media - which are B3/B - are currently the equivalent of around Libor plus 1,600 basis points in the secondary market given the discounts and based on a four-year life.

"There's no new issue market right now. It's possible they got some relationship banks that could step up, but it's unlikely. No liquidity. Hard to see anybody lend to a small market broadcaster right now," the source added.

"Everybody is very concerned about the market. Market is the worst in history and it doesn't look like it's the bottom yet. Until bids stop falling, nobody is going to be bringing anything to market," a second source remarked about the primary in general.

Bonten acquisition still going through?

With the uncertainty surrounding the acquisition debt financing, the question of whether the acquisition itself is still feasible was raised.

According to the market source, it is a possibility that the acquisition will fall apart, although he had not heard anything official or specific on this matter, just rather hypothesizing at this point.

The company declined to comment to Prospect News on this matter.

In July, Bonten Media announced that it reached an agreement to purchase NewsChannel 5 Network LLC, the owner and operator of CBS affiliate WTVF-TV in Nashville, Tenn., from Landmark Communications.

At that time, it was said that Bonten Media's current sponsor, Diamond Castle Partners, committed to provide the equity portion of the purchase price.

Pro forma for the transaction, total leverage was going to be around 7.0 times, based on the original term loan commitment size.

The acquisition is subject to approval by the Federal Communications Commission and other customary conditions.

Bonten Media is a New York-based television broadcasting company.

JBS reworks revolver

JBS USA has reduced the size of its in market ABL revolving credit facility and raised pricing on the tranche, according to a market source.

The revolver is currently expected to end up with a size of $400 million, down from the originally proposed amount of $750 million, the source said, adding that the smaller size would come with a $100 million greenshoe.

In addition, pricing on the revolver has been flexed up to Libor plus 325 bps from initial talk at launch of Libor plus 275 bps, the source remarked.

Prior to launching, early guidance on the revolver had been in the Libor plus 250 bps to 275 bps area.

JBS term loan pricing still in flux

JBS USA is also currently in market with a $500 million six-year term loan, which is expected to come at higher pricing than originally proposed, but firm details on the pricing levels have yet to be decided upon, according to an informed source.

Recently, chatter has been going around that the term loan is being guided in the area of Libor plus 750 bps with an original issue discount of 96, up from initial talk of Libor plus 550 bps with an original issue discount of 97, and that the loan would continue to have a 3.25% Libor floor.

However, according to the source, that price talk is just rumor and nothing official has been announced.

Credit Suisse and GE Capital are the lead banks on the deal, with Credit Suisse the left lead on the term loan and GE the left lead on the revolver.

Proceeds will be used to help fund parent JBS SA's acquisitions of Smithfield Beef Group Inc. for $565 million in cash and National Beef Packing Co. LLC for $465 million in cash and $95 million in common stock.

JBS USA is a meat processing and packaging company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.