GM rises with waiver; Ford comes in after run-up; LCDX, cash weaken; TNS firms timing

By Sara Rosenberg

New York, March 5 - General Motors Corp.'s term loan gained some ground during Thursday's trading hours as the company revealed that it got a loan waiver that was needed because of the auditors report in its latest filing.

Also in the auto sector, Ford Motor Co.'s term loan was a little softer after experiencing a very late day rally during the previous session that was spurred on by the company's debt restructuring news.

In more trading happenings, the LCDX 10 index was lower and the cash market dropped as well as equities were weaker.

Over in primary happenings, TNS Inc. solidified timing on the launch of its proposed term loan, with the end result being that the deal will come on its previously announced targeted date.

General Motors heads higher

General Motors' term loan was stronger as a waiver was received from bank lenders regarding the "going concern" opinion was that was present in the company's 10-K filed with the Securities and Exchange Commission on Thursday.

The term loan was quoted at 42 bid, 44 offered, up from 38 bid, 40 offered on Wednesday, the trader said.

Without the waiver, the company's credit facility debt would have been callable by the lenders as a result of the auditors report.

In the filing, General Motors said that its independent public accounting firm issued the already expected opinion that recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow raise substantial doubt about the company's ability to continue as a going concern.

General Motors continued to say that its future is dependant on the successful enactment of its viability plan that was presented to the government, and if this viability plan does not go through, it may be forced to file for bankruptcy protection.

GM plan calls for more funding

On Dec. 31, the company entered into a loan agreement with the U.S. Department of Treasury for funding of $13.4 billion, payable in three tranches. The initial installment of $4 billion was provided on Dec. 31, followed by subsequent installments of $5.4 billion on Jan. 21 and $4 billion on Feb. 17.

In the viability plan filed with the Treasury on Feb. 17, General Motors included a request for additional government funding, as well as support from other governments outside of the United States.

The company said that it requires this additional funding in 2009 to continue operations until global automotive sales recover and its restructuring actions generate benefits.

General Motors is a Detroit-based automaker.

Ford retreats slightly

In more auto news, Ford's term loan gave up some of the gains it posted late in the day on Wednesday following the announcement of a proposed restructuring, according to a trader.

The term loan was quoted at 33 bid, 34 offered, down from the previous day's close of 35 bid, 36 offered, the trader said. Prior to the restructuring news, which was as late as around 4:30 p.m. ET on Wednesday, the term loan was being quoted at 29 bid, 33 offered.

Ford said late Wednesday that it plans to restructure its debt through tender and conversion offers that would result in a significant reduction in its debt obligations and annual interest expense.

One aspect of the plan is the commencement of a $500 million cash tender offer for the company's senior secured term loan debt, of which $6.9 billion is outstanding.

Ford tendering in high 30s to high 40s

Ford's term loan tender offer is being done as a "Dutch auction," in which lenders are being invited to submit bids to sell their term debt within a price range of 38 to 47.

If the aggregate purchase price for term loan debt tendered exceeds $500 million, Ford will purchase at the clearing price all loans tendered at a price below the clearing price and purchase loans tendered at the clearing price on a pro-rated basis.

In addition, the company is doing a $1.3 billion cash tender offer for its unsecured non-convertible debt securities, of which approximately $8.9 billion is outstanding, and a conversion offer relating to its approximately $4.88 billion 4.25% senior convertible notes due Dec. 15, 2036.

Ford is a Dearborn, Mich.-based automaker.

LCDX, cash slide

The LCDX 10 index and the overall cash market were both softer on Thursday in sympathy with stocks, according to a trader.

The index was quoted at 71.70 bid, 72 offered, down from Wednesday's levels of 72.75 bid, 72.95 offered, the trader said.

And, cash in general was down by a bout a point on the day, the trader added.

As for stocks, Nasdaq closed down 54.15 points, or 4%, NYSE closed down 197.29 points, or 4.42%, S&P 500 closed down 30.32 points, or 4.25%, and Dow Jones Industrial Average closed down 281.40 points, or 4.09%.

TNS sets launch

TNS firmed up a bank meeting date of March 17 in New York for the launch of its proposed $250 million incremental term loan, which was indeed the timeframe that was previously being targeted, according to a market source.

The loan, due March 28, 2014, is talked at Libor plus 600 basis points with a 3.5% Libor floor, an original issue discount of 90, and 101 soft call protection for one year.

Amortization on the loan is 7.5% in the first year, 10% in the second and third years and 12.5% in the fourth and fifth years.

Financial covenants include a limit on capital expenditures, which will initially be $50 million in the first year with step-ups to be agreed upon, a maximum leverage ratio, which will initially be 3.25 times with step-downs to be agreed upon, and a minimum consolidated fixed-charge coverage ratio, which will initially be 1.20 times with step-ups to be agreed upon.

SunTrust is the bookrunner and lead agent on the new loan and has committed to provide $40 million of the debt.

TNS loan for acquisition

Proceeds from TNS' new term loan will be used to help fund the acquisition of VeriSign Inc.'s communication services group for $230 million in cash.

Expected pro forma leverage is around 2½ times and it is anticipated that the company's three-B rating will be maintained.

In connection with the new deal, TNS' existing $178.5 million term loan B will be amended to accommodate the new debt and to revise pricing to Libor plus 600 bps with a 3.5% Libor floor from the current rate of Libor plus 200 bps.

The financing and the acquisition are expected to close within the next 60 days, subject to customary regulatory approvals.

TNS is a Reston, Va.-based provider of business-critical, cost-effective data communications services for transaction-oriented applications.

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