Georgia-Pacific heads higher with amendment; Dollar General better on numbers; LCDX dips

By Sara Rosenberg

New York, Dec. 3 - Georgia-Pacific Corp.'s term loan traded stronger during Wednesday's market hours following the launch of the company's amendment proposal, and Dollar General Corp.'s term loan debt was up after positive earnings were released.

In more secondary happenings, LCDX 10 was weaker despite the rise in equities, and cash in general was unchanged to slightly softer.

Georgia-Pacific rises

Georgia-Pacific's term loan B gained some ground during the trading session as investors were pleased with the idea that in connection with the company's proposed amendment, they would get a paydown and a consent fee, according to a trader.

The term loan B was quoted at 79½ bid, 81½ offered, up from Tuesday's closing levels of 77½ bid, 79½ offered, the trader said.

On Wednesday, Georgia-Pacific approached lenders with an amendment that would result in $400 million of the term loan B being repaid and $100 million of the term loan A being repaid.

Proceeds for the repayments would come from asset sales, cash flow and the company's existing receivables facility.

In addition, lenders were told that if they consented to the amendment, they would get a 100 bps amendment fee.

Georgia-Pacific looking to loosen leverage covenant

The main purpose of the amendment for Georgia-Pacific is to gain flexibility under its total leverage covenant through 2010.

Specifically, under the amendment, the covenant would remain at 5.25 times, the current requirement, through 2010, whereas without the amendment, the covenant would move to 4.5 times in 2009 and 4.25 times in 2010.

Citigroup is leading the amendment process.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Dollar General up with earnings

In more trading news, Dollar General's term loan B debt also traded higher on Wednesday, with the momentum attributed to favorable third-quarter results, according to traders.

One trader said that the term loan B-1 was quoted at 78 bid, 80 offered, up from 76½ bid, 78½ offered.

Meanwhile, a second trader said that the term loan B-1 was quoted at 77½ bid, 79½ offered, up about a quarter to a half a point on the day. This trader said that the paper got as high as 79 bid, 81 offered, but came back in as "people sold into strength."

The second trader had the term loan B-2 quoted at 74 bid, 76 offered, up about a quarter of a point on the day as well. He said that this tranche got as a high as 75¾ bid, 77¾ offered on the numbers before coming back in by the end of the day.

Dollar General EBITDA grows

For the third quarter ended Oct. 31, Dollar General reported adjusted EBITDA of $228.6 million, an increase of $86.5 million, or 61%, from last year.

The company's net loss for the quarter was $7.3 million, after recording pre-tax costs of $34.5 million related to the proposed settlement of the shareholder lawsuit that arose out of the merger with KKR, compared with a net loss of $33 million in the 2007 third quarter.

Sales for the quarter were $2.6 billion, up 12.4% when compared to sales of $2.31 billion in the same period last year.

"We are very pleased to report strong results again for the third quarter, particularly given the difficult economic environment," said Rick Dreiling, chairman and chief executive officer, in a news release. "We remain committed to improving our operations to better serve our customers, and are encouraged by their positive response to the changes we have been making in our stores."

Dollar General debt to EBITDA ratio declining

Dollar General's long-term obligations to adjusted EBITDA, as of Oct. 31, decreased to 4.7 times from 7.1 times since the closing of its buyout transaction in July 2007.

As of Oct. 31, outstanding long-term obligations were $4.18 billion, including $2.3 billion outstanding under the company's senior secured term loan.

There were no borrowings under the company's asset-based revolver.

In addition on Wednesday, the company said that it continues to expect capital expenditures for the year to be about $200 million to $220 million.

Dollar General is a Goodlettsville, Tenn.-based discount retailer.

LCDX softens

LCDX 10 came in on Wednesday even though the stock market ended the day stronger, and the cash market overall was described as unchanged to lower, according to traders.

The index went out around 76.20 bid, 76.70 offered, down from Tuesday's levels of 76.50 bid, 77.25 offered, one trader remarked.

Nasdaq closed up 42.58 points, or 2.94%, Dow Jones Industrial Average closed up 172.60 points, or 2.05%, S&P 500 closed up 21.93 points, or 2.58%, and NYSE closed up 96.60 points, or 1.82%.

"Loan market feels a little weaker today. I think people are starting to use [LCDX] as a hedging possibility, so it's starting to correlate more with loans than with stocks," one trader said in explanation of the index's performance.

However, according to a second trader, the cash market was basically unchanged with levels "kind of stuck in a range right now" as "volume is slowing down at year end."

Ford, GM hold steady

Also in trading, Ford Motor Co. and General Motors Corp. held pretty firm on Wednesday, with levels quoted unchanged to higher, depending on who was asked, according to traders.

Ford's term loan was quoted at 47 bid, 48 offered by two traders, although one trader said it was unchanged to maybe up a quarter of a point on the day and the other trader said it was up on the bid side by a full point.

General Motors' term loan was also quoted at 47 bid, 48 offered by the two traders, with one saying it was unchanged and the other saying it was maybe up a quarter of a point.

Both companies had seen a couple point rally in levels during the previous session on news that they presented their bailout plans to Congress.

Ford's plan requests access to an up to $9 billion bridge loan in case the current economic crisis worsens or there is a bankruptcy of a major competitor, and General Motors' plan calls for access to $18 billion in funds, comprised of a $12 billion bridge loan and a $6 billion revolving line of credit.

General Motors is a Detroit-based automotive manufacturer. Ford is a Dearborn, Mich.-based automaker.

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