Harrah's up on paydown, amendment; GM gains, pushing others higher; Clear Channel skyrockets

By Sara Rosenberg

New York, May 27 - Harrah's Operating Co. Inc.'s term loan B-2 traded higher on Wednesday following the company's announcement that it will be selling notes to repay some bank debt and seeking an amendment to its credit facility.

Also in the secondary, General Motors Corp.'s term loan rallied as the company's tender offer expired and failed, making bankruptcy look likely, and investors' hopes for a par paydown became even more credible.

And, with General Motors' significant rise, other auto names were shoved into stronger territory, including Ford Motor Co., Visteon Corp. and Lear Corp.

Another strong mover on Wednesday was Clear Channel Communications Inc. as its term loan gained by a couple of points, but the impetus behind the momentum wasn't clear prior to press time.

Meanwhile, over in the primary market, Quebecor World Inc. has reset the launch of its exit financing credit facility, delaying it by one day because of scheduling conflicts, and now that timing has been finalized, structure and early price talk on the deal was announced.

Harrah's B-2 trades better

Harrah's term loan B-2 moved up by a few points during the trading session after news emerged that lenders will be getting a paydown, if the company's proposed transactions are successful, according to traders.

The term loan B-2 was quoted at 79 bid, 80¼ offered, up from Tuesday's levels of 76½ bid, 77½ offered, traders said.

Late Tuesday, Harrah's said that it is selling $1 billion of senior secured notes due 2017, with proceeds going towards the repayment of some term loan and revolver borrowings, and for general corporate purposes.

Completion of the bond offering is subject to the company successfully amending its senior secured credit facility.

Harrah's amendment proposal

Under Harrah's amendment, the company would be allowed to sell secured notes or loans as long an agreed amount of the net cash proceeds from any notes or loan issuance are used to prepay existing term loans or revolving loans at par, according to an 8-K filed with the Securities and Exchange Commission.

The revised credit agreement would exclude from the maintenance covenant notes secured with a first-priority lien on the assets that secure the senior secured credit facility, which collectively result in up to $2 billion of gross proceeds, and up to $250 million of consolidated debt of subsidiaries that are not wholly owned subsidiaries.

In addition, the amendment would permit loan repurchases at a discount and would allow the company to agree with individual lenders to extend the maturity of their term loans or revolving commitments in return for increased interest rates or otherwise modified terms.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

General Motors nears par

General Motors' term loan moved closer to par in the secondary market as bankruptcy appears to be the company's next destination and a Wall Street Journal article confirmed rumors that if that is the case, loan lenders will get paid down in full, according to a trader.

The term loan was quoted at 94 bid, 96 offered, up from 84½ bid, 86½ offered, the trader said, adding that not a lot of the paper is trading since investors are just waiting for the expected par repayment at this point.

On Wednesday, General Motors revealed that its exchange offers for $27.2 billion of its unsecured public notes for 225 shares of its common stock expired.

The company went on to say that the amount of tenders received was substantially less than the amount needed to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury, to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers.

General Motors expected to file

As a result of the exchange offer failing, lenders feel more convinced that the company will be seeking bankruptcy protection.

In fact, when General Motors launched the exchange offer in April, it had said that if, prior to June 1, there were not enough tenders received, it expects to seek relief under the U.S. Bankruptcy Code, and that a sale might be the most likely result.

While bankruptcy was not specifically mentioned in Wednesday's tender offer announcement, the company did remark that its board of directors will be meeting to discuss its next steps.

General Motors is a Detroit-based automotive company.

Ford, Visteon, Lear rise

In sympathy with General Motors' performance on Wednesday, Ford, Visteon and Lear all posted some gains, according to traders.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted by one trader at 71¼ bid, 72¼ offered, up from 66¾ bid, 67¾ offered, and by a second trader at 72 bid, 73½ offered.

Visteon, a Van Buren Township, Mich.-based automotive supplier, saw its term loan quoted at 36½ bid, 38½ offered, up from 33½ bid, 35 offered, the trader continued.

And, Lear, a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and electronic products, saw its term loan quoted at 66 bid, 67½ offered, up about a point on the day, the trader added.

Clear Channel jumps

Clear Channel's term loan saw a significant improvement during market hours, but traders were hard pressed to be able to find the reason behind the movement.

One trader had the term loan quoted at 60 bid, 60½ offered, a second trader had it quoted at 60½ bid, 61½ offered, and a third trader had it quoted at 59½ bid, 61½ offered.

All three traders agreed that on Tuesday the loan was quoted at 54 bid, 56 offered.

Clear Channel is a San Antonio-based media and entertainment company.

Quebecor reschedules, floats details

Moving to new deal happenings, Quebecor World changed the date for the New York bank meeting that will kick of syndication on its $675 million exit financing credit facility to this Friday from this Thursday because of scheduling issues, according to a market source.

In addition, now that the bank meeting is fast approaching, lenders were given details on the structure of the facility and early guidance began circulating.

The three-year facility is comprised of a $350 million revolver talked at Libor plus 450 basis points with an unused fee that can range from 75 bps to 100 bps, and a $325 million term loan talked at Libor plus 600 bps, the source remarked.

Both tranches have a 3% Libor floor, and while there will be upfront fees on the revolver and an original issue discount on the term loan, specifics on those features are still to be determined, the source added.

Previously, it was known that the facility would be sized in the range of $625 million to $700 million and would include a revolver and a term loan. The estimate had been that each tranche would be in the $300 million plus area.

Quebecor led by three

The Quebecor exit facility is being done via lead arrangers Credit Suisse, GE Capital Markets and Wachovia, with Credit Suisse the left lead on the term loan and GE the left lead on the revolver.

The facility is expected to be finalized by mid-July.

In addition to the exit facility, the company's new capital structure contemplated under its plan of reorganization would include up to $75 million of new unsecured notes, new convertible preferred shares, about 73.3 million of new common shares, about 10.7 million of new warrant bundles and a yet-to-be-determined cash payment.

The new capital structure would be exchanged for the $2.7 billion of liabilities subject to compromise and for repayment of the company's debtor-in-possession financing facility.

Quebecor is a Montreal-based printing and marketing company.

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