Freescale dips with downgrade; Regal Cinemas steady on numbers; LCDX rises; Tyson talk surfaces

By Sara Rosenberg

New York, Feb. 19 - Freescale Semiconductor Inc.'s term loan headed to lower ground during Thursday's market hours as the company saw a rating revision from Moody's Investors Service.

Also in the secondary market, Regal Cinemas Corp.'s term loan held firm after the company released fourth-quarter earnings results and LCDX 10 was a little higher even though stocks were weaker.

Meanwhile, on the new deal front, price talk on Tyson Foods Inc.'s ABL revolving credit facility emerged now that banks have been approached about the transaction.

Freescale slides with rating change

Freescale Semiconductor's term loan softened during the trading session, with one trader pointing to the rating downgrade by Moody's as a possible stimulus behind the weakening.

The term loan was quoted at 46 bid, 47 offered, down from Wednesday's levels of 47 bid, 48 offered, the trader said.

On Thursday, Moody's cut Freescale's probability of default rating to Ca from Caa1, reflecting the view that the company's recent debt exchange offer is a distressed exchange.

"While no payment default has occurred and there are no debt maturities until 2012, in Moody's opinion, the successful closing of the transaction, which is designed to reduce debt and interest expense, would represent the occurrence of a deemed default," the rating agency said.

As was previously reported, under the proposed transaction, up to $1 billion of a first-lien incremental term loan will be exchanged for about $2.8 billion to $3 billion of senior and subordinated unsecured notes.

Freescale bank loan may be downgraded

Moody's also said on Thursday that if the final outcome of the exchange is similar to the proposed terms, the rating on the Freescale's senior secured credit facilities would likely be revised downward.

This potential downgrade would reflect a higher expected loss driven by the reduced senior and junior unsecured positions in the capital structure as well as the expanded size of the senior secured creditor class to about $5.2 billion from $4.2 billion.

Moody's went on to say that upon closing of the exchange, the probability of default rating will probably revert back to Caa1.

Freescale is an Auston, Texas-based designer and manufacturer of embedded semiconductors for the transportation, networking and wireless markets.

Regal flat with earnings

Regal Cinemas' term loan was pretty steady on Thursday even after parent company Regal Entertainment Group came out with quarterly numbers, according to a trader.

The term loan was quoted at 90 bid, 92½ offered, unchanged on the day, the trader said.

For the fiscal fourth quarter, the company reported net income of $30.1 million, or earnings per diluted share of $0.20, compared to net income of $23.2 million, or earnings per diluted share of $0.15 in the same period of 2007.

Revenues for the quarter were $711.7 million compared to revenues of $599.9 million last year.

And, adjusted EBITDA was $145.8 million for the fourth quarter.

Regal is a Knoxville, Tenn.-based motion picture exhibitor.

LCDX inches up

LCDX 10 was a little stronger during the trading session despite equities being marginally lower, according to a trader.

The index was quoted at 72.75 bid, 73.05 offered, up from 72.50 bid, 72.80 offered, the trader said, explaining that people were taking some profits, which pushed levels higher.

Nasdaq closed down 25.15 points, or 1.71%, NYSE closed down 43.38 points, or 0.88%, S&P 500 closed down 9.48 points, or 1.20%, and Dow Jones Industrial Average closed down 89.68 points, or 1.19%.

As for the overall loan cash market, it was described by traders as unchanged to maybe slightly better on very low volumes.

Tyson reveals pricing

Switching to the primary market, Tyson Foods revealed price talk on its proposed $1 billion three-year senior secured ABL revolving credit facility now that the company met with banks on Wednesday to discuss the deal, according to a market source.

The revolver is being guided at Libor plus 400 basis points based on the company's corporate credit ratings of Ba3/BB.

If the corporate rating is Ba1/BB+ or higher, pricing will move to Libor plus 375 bps and if the rating is B1/B+ or lower, pricing will move to Libor plus 425 bps.

JPMorgan, Bank of America, Barclays, Wachovia and Rabobank are the joint lead arrangers and joint bookrunners on the revolver, with JPMorgan the left lead.

Tyson revolver part of refinancing

Proceeds from Tyson's proposed ABL facility will be used to replace an existing revolver.

Furthermore, on Thursday, the company announced that it will be selling $500 million of unsecured senior notes to repay borrowings and terminate commitments under its existing accounts receivables facility, repay and/or refinance other debt and for other general corporate purposes.

Closing on both the loan and the notes are expected to take place in March.

Tyson is a Springdale, Ark.-based processor and marketer of chicken, beef and pork.

Rite Aid closes

Rite Aid Corp. closed on its new $225 million second-priority accounts receivable securitization term loan due Sept. 14, 2010, according to a news release.

Pricing on the loan is Libor plus 1,200 basis points with a 3% Libor floor, and it was issued to investors at an original issue discount of 97.

The loan is non-callable for six months with a make-whole provision, and then it is callable at 101 for the following six months. Thereafter, it is callable at par.

Citigroup acted as the lead arranger and bookrunner on the deal. Initially, the bank committed to provide $100 million of the loan, with the remaining $100 million to be syndicated on a best-efforts basis through the earlier of closing and Feb. 20.

Rite Aid final terms differ from original thoughts

Plans for the new term loan were first announced by Rite Aid through the filing of an 8-K with the Securities and Exchange Commission, in which expected pricing and call protection were outlined.

In the filing the spread was detailed as Libor plus 1,400 bps. However, the original issue discount and the Libor floor basically made up for the lower final spread.

Also, according to the filing, the original plan was for the loan to have 101 call protection against all optional and mandatory prepayments.

In addition, the loan was initially expected to be sized at $200 million but during syndication, it was upsized by $25 million due to strong demand.

The investor group for the deal, which never experienced a formal launch, includes high-yield mutual funds, loan accounts and distressed accounts.

Rite Aid loan replacing step downs in existing deal

Rite Aid came to market with the new second-priority term loan to replace the previously announced $200 million reduction in availability on its existing accounts receivable securitization facility, which was renewed on Jan. 22 and extended through Jan. 21, 2010.

Security for the new loan is second-priority liens on eligible third-party pharmaceutical receivables securing an existing facility.

Proceeds will be used to provide funding for the acquisition of receivables and/or participation interests therein.

Rite Aid is a Camp Hill, Pa.-based operator of a chain of retail drugstores.

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