LCDX, cash steady, shrugging off stock dip; Ford, GM hold firm

By Sara Rosenberg

New York, Dec. 22 - LCDX 10 and the cash market overall ignored the slide in the equities market and held in at previous levels as activity was light ahead of the upcoming holidays.

Also in trading, Ford Motor Co. and General Motors Corp. were steady following their Friday rise on the announcement of a government rescue plan.

LCDX, cash see light volume

LCDX 10 and the cash market were basically unchanged on Monday as there was "just no activity" being that the holiday season has pretty much arrived, according to traders.

The index was quoted at 76.75 bid, 77.25 offered, in line with previous closing levels, one trader remarked.

"Today was the slowest day," the trader added.

The trader went on to remark that it was the lack of activity that left levels intact since the stock market was down on Monday.

Nasdaq closed down 31.97 points, or 2.04%, Dow Jones Industrial Average closed down 59.42 points, or 0.69%, S&P 500 closed down 16.25 points, or 1.83%, and NYSE closed down 95.31 points, or 1.70%.

Ford, GM hold in

Ford and General Motors both saw their term loans remain in line with Friday's levels, which had been boosted by news of a government loan plan, according to a trader.

Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 40 bid, 42 offered, unchanged on the day, the trader said. On Friday, the debt had risen by about two points.

And, General Motors, a Detroit-based automaker, saw its term loan quoted at 45 bid, 47 offered, also unchanged on the day. On Friday, the debt had risen by about three points.

Last week's improvement was attributed to President Bush's decision to give $17.4 billion in loans to the auto sector so as to rescue them from their current liquidity problems.

Under the rescue plan, $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.

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.

Ford had said that it was happy about the government's decision and that it won't be getting any of the funds because it does not face a near-term liquidity issue.

King Pharmaceuticals allocates

In other news, King Pharmaceuticals Inc.'s $200 million four-year term loan has been allocated, but there hasn't been any trading since it's all commercial banks that committed to the deal, according to a market source.

The allocations went out on Friday, the source added.

The term loan is priced at Libor plus 500 basis points and was sold at an original issue discount of 96.

During syndication, the size of the term loan was reduced to $300 million, with the company opting to use more of its own cash to fund the acquisition of Alpharma Inc.

Amortization on the term loan is 15% in year one, 20% in years two and three and 45% in year four.

Credit Suisse and Wachovia are the joint lead arrangers and bookrunners on the deal, with Credit Suisse the administrative agent.

King revolver amended to allow for draw

King Pharmaceuticals' $475 million revolving credit facility was recently amended to allow the company to draw $425 million for the Alpharma acquisition and to allow for the use of the new term loan.

In addition, the amendment increased revolver pricing to Libor plus 500 bps from Libor plus 87.5 bps and raised the commitment fee to 50 bps from 20 bps.

Also, the amendment provides for mandatory quarterly commitment reductions of 15% in year one and 20% in years two and thereafter, with the remainder due at maturity on April 2012.

Covenants under the amended revolver include maintenance of maximum funded debt to consolidated EBITDA ratios that range from 1.50 to 1.00 to 3.25 to 1.00, and maintenance of minimum consolidated EBITDA to interest expense ratios that range from 3.75 to 1.00 to 4.00 to 1.00 - with the ranges depending on dates and the occurrence of events relating to certain patents.

Lenders received a 100 bps amendment fee for their consents.

King buying Alpharma for $1.6 billion

Under the acquisition agreement, King is buying Alpharma Inc. for $37 per share in cash for a total equity value of about $1.6 billion.

Initially, Alpharma had rejected the buyout proposal, so King took the offer directly to Alpharma shareholders. But then, Alpharma decided to sign a definitive purchase agreement with King after all.

The company was going to come to market with a $1 billion senior secured credit facility (Ba2/BBB-), consisting of a $150 million revolver talked at Libor plus 500 bps, a $350 million term loan A talked at Libor plus 500 bps with an original issue discount of 96 and a $500 million term loan B talked at Libor plus 550 bps with an original issue discount of 95.

However, at launch, lenders were presented with the structure of a new term loan and keeping the existing revolver in place.

King is a Bristol, Tenn.-based integrated branded pharmaceutical company. Alpharma is a Bridgewater, N.J.-based specialty pharmaceutical and animal health company.

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