Ford, GM better as rescue hopes rise; Tribune up on bankruptcy filing; Herff Jones deal disintegrates

By Sara Rosenberg

New York, Dec. 8 - Ford Motor Co. and General Motors Corp. were both stronger on Monday on buzz that Congress may be close to firming up a bailout plan for the companies, Tribune Co.'s term loan B headed higher after the company announced that it filed for protection under Chapter 11, and LCDX 10 improved with equities.

In other news, the Herff Jones credit facility has been removed from the forward calendar as the deal died in connection with the cancellation of the company's acquisition of American Achievement Group Holding Corp.

Ford, GM trade up

Ford and General Motors both saw their term loans improve during the trading session as various news reports circulated that a draft of a bailout bill has been worked out and that a final short-term plan could emerge soon, according to traders.

Ford saw its term loan quoted at 46 bid, 47 offered, up from 44½ bid, 46½ offered, traders said.

Meanwhile, General Motors saw its term loan quoted at 50 bid, 53 offered, up from 48½ bid, 50½ offered, traders continued.

Auto rescue would give short-term help

Under the bill that was being discussed on Monday, the government would provide $15 billion in short-term financing - mostly to General Motors and Chrysler LLC who appear to be in the most immediate danger of possibly filing for bankruptcy.

Last week, the auto companies all presented plans to Congress, pleading cases for government aid so that they could hopefully return to profitability.

Detroit-based General Motors requested access to $18 billion in funds, comprised of a $12 billion bridge loan - of which it wants $4 billion this month - and a $6 billion revolving line of credit.

Chrysler asked for $7 billion in loans from the government.

And, Dearborn, Mich.-based Ford, on the other hand, only requested 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.

Tribune better with filing

Tribune's term loan B gained some ground on Monday as the company filed for bankruptcy so that it can restructure its debt obligations, according to traders.

The company's Chicago Cubs franchise, including Wrigley Field, is not included in the Chapter 11 filing, and efforts to monetize the Cubs and its related assets will continue.

Following the bankruptcy announcement, Tribune's term loan B was quoted by one trader at 33 bid, 35 offered and by a second trader at 32 bid, 35 offered. Both traders agreed that the paper went out on Friday at 29 bid, 31 offered.

"People might think that recoveries are a little better than where it was," the first trader remarked in explanation of why the loan rose on the news.

Barclays to help Tribune liquidity

Tribune also revealed on Monday that it has negotiated an agreement with Barclays to maintain post-filing its existing securitization facility and that Barclays has agreed to provide a letter-of-credit facility.

According to Tribune, these agreements with Barclays are meant to supplement its cash availability in the event of even more significant declines in operating results.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," said Sam Zell, chairman and chief executive officer, in a news release.

"Unfortunately, at the same time, factors beyond our control have created a perfect storm - a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.

"We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve. This restructuring focuses on our debt, not on our operations," Zell added in the release.

Tribune is a Chicago-based media company.

LCDX inches up

LCDX 10 had a positive day on Monday as the stock market was stronger, while cash in general was unchanged to up a quarter to a half a point, according to traders.

The index was quoted at 76.50 bid, 76.85 offered, up from Friday's levels of 75.10 bid, 75.60 offered, traders said.

Nasdaq closed up 62.43 points, or 4.14%, Dow Jones Industrial Average closed up 298.76 points, or 3.46%, S&P 500 closed up 33.63 points, or 3.84%, and NYSE closed up 238.43 points, or 4.41%.

In the cash market, although things felt a little better, activity was very light, one trader remarked.

"Haven't seen too much today as far as volume," the trader added.

Herff Jones new deal disappears

Moving to the primary front, Herff Jones' proposed $735 million senior secured credit facility (Ba3/BB+) will no longer be happening as the acquisition of American Achievement, which the loan was going to fund, was called off, according to a market source.

The facility, as described to Prospect News in the September/October timeframe, consisted of a $100 million five-year revolver talked at Libor plus 325 basis points, a $210 million five-year term loan A talked at Libor plus 325 bps and a $425 million seven-year term loan B talked in the Libor plus 350 bps to 375 bps area.

All tranches were going to have a 3% Libor floor.

Initially, it was thought that the term loan B would be sized at $300 million and the term loan A would be sized at $335 million, but funds were moved around after the revolver and the term loan A were launched to commercial banks during the second week of August.

At one point, the retail launch had been set to take place on Sept. 16, but the day before the bank meeting, news surfaced that Bank of America was purchasing Merrill Lynch and Lehman Brothers filed for bankruptcy, resulting in a postponement of the launch and a new date was never pinned down.

Acquisition terminated on approvals denial

Herff Jones' purchase of American Achievement was cancelled because the parties did not receive the required regulatory approvals necessary to complete the transaction, according to an 8-K that was filed with the Securities and Exchange Commission late Friday.

Bank of America and Wachovia were going to act as the lead banks on the credit facility that was going to fund the deal.

Herff Jones is an Indianapolis-based manufacturer and publisher of educational products, recognition awards and graduation-related items. American Achievement is an Austin, Texas-based provider of commemorative jewelry, class rings, yearbooks, letter jackets and other jewelry, from Fenway Partners.

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