Federal-Mogul bank debt heads north; Premcor meeting kicks off heavy new deal week

By Sara Rosenberg

New York, Jan. 13 -Federal-Mogul Corp.'s bank debt rallied on Monday as quotes on the paper improved by about two to three points. Meanwhile, Premcor Inc.'s bank meeting for a $750 million credit facility was just the beginning of what is expected to be a bustling primary this week as at least 10 deals are anticipated to hit the market with four of those taking place on Tuesday.

Federal-Mogul Corp.'s bank debt was quoted with a 66 bid and a 68 offer, according to a distressed trader.

The company announced late Friday that the Official Committee of Unsecured Creditors and the Official Committee of Asbestos Claimants filed a motion in the United States Bankruptcy Court to terminate the debtors' exclusive right to file a plan of reorganization, which expires on March 3, 2003.

The motion indicates that the plan would provide for asbestos claimants and noteholders to convert all their claims to equity and receive 100% of the common stock of the reorganized company. Of this common stock, 49.9% would go to noteholders and 50.1% to a trust, according to a filing with the Securities and Exchange Commission.

Furthermore, the plan of reorganization provides that the debtors' secured bank lenders, if valid and fully secured, will be given new secured notes for the full amount of the debt.

The motion will be heard by the Bankruptcy Court on Jan. 29.

In early April 2002, the company's bank debt skyrocketed into the high 60s from the 50s in response to new reports that asbestos plaintiffs and bondholders reached an agreement with the company, which would allow Federal Mogul to emerge from Chapter 11 bankruptcy protection. One report said the agreement would give claimants 50.1% of the company's new equity and insurance proceeds and that holders of the company's $2 billion face value of bonds would get the rest of the company's equity.

At that time, a trader explained to Prospect News that the bank paper went up after these reports because, "there's a conclusion that there's a structure out there and there's good value to the company" given they are a global supplier of automotive components.

However, also at that time, Federal-Mogul put out a statement saying: "Federal-Mogul has not agreed to the terms of any plan of reorganization that would permit it to emerge from Chapter 11. We continue to work diligently with all parties involved in our restructuring, and we remain optimistic that with our leadership a consensual resolution can and will be reached."

Federal-Mogul is a Southfield, Mich. automotive parts manufacturer.

In primary news, Premcor Inc. held a bank meeting on Monday for an amended and restated $750 million credit facility, according to a syndicate source. Deutsche Bank is the lead arranger on the deal.

The loan consists of a $600 million three-year revolver with an interest rate of Libor plus 300 basis points and a $150 million three-year pre-funded letter of credit facility with an interest rate of Libor plus 325 basis points.

The company is amending and restating its credit facility since waivers and approvals under the credit agreement are needed in order to consummate the debt financing and the acquisition of the Memphis refinery from Williams Cos., Inc., according to a filing with the Securities and Exchange Commission.

"Certain covenants relating to minimum cash requirements, permitted indebtedness and minimum net worth requirements will also be modified. We expect that all of the other covenants and conditions will remain substantially the same under the amended and restated credit agreement," the filing said.

Premcor is an Old Greenwich, Conn. petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products.

Coming up on Tuesday, Fisher Scientific is scheduled to launch a $550 million credit facility, consisting of a $150 million five-year revolver with an interest rate of Libor plus 300 basis points and a $400 million term loan B with an interest rate of Libor plus 300 basis points.

JPMorgan, Deutsche and Credit Suisse First Boston are the lead banks on the deal that will be used to help fund the refinancing of Fisher's $600 million 9% senior subordinated notes due 2008.

Fisher Scientific is a Hampton, N.H. manufacturer of scientific instruments, equipment and supplies.

Houghton Mifflin will launch a $575 million credit facility consisting of a $325 million revolver with an interest rate of Libor plus 325 basis points and a $250 million term loan B with an interest rate of Libor plus 375 basis points.

CIBC, Goldman Sachs and Deutsche are the lead banks on the deal that will be used to help fund the Boston publishing company's buyout from Vivendi Universal by Thomas H. Lee Partners, Blackstone Group, Bain Capital and Apax Partners.

CSX Lines LLC will launch a $200 million credit facility consisting of a $175 million six-year term loan B with an interest rate of Libor plus 400 basis points and a $25 million five-year revolver with an interest rate of Libor plus 350 basis points.

ABN Amro and UBS Warburg are joint lead arrangers on the deal that will be used to help fund the acquisition of the Charlotte, N.C. container shipping unit by the Carlyle Group.

And lastly, Nexstar Broadcasting Group Inc. will launch a new $260 million credit facility consisting of an $85 million revolver with an interest rate of Libor plus 325 basis points and a $175 million term loan B with an interest rate of Libor plus 350 basis points.

Bank of America and Bear Stearns are the lead banks on the deal that will be used to refinance existing debt.

Nexstar is a Clarks Summit, Pa. owner and operator of television stations.

The upcoming Boston Celtics deal has already received a lot of interest, according to a syndicate source, who jokingly said that "we're now sitting here counting noses" in an attempt to figure out how many people to include on the deal.

The $180 million credit facility is not scheduled to officially launch until Wednesday. SG Cowen is the lead bank on the deal.

The loan consists of a $100 million five-year term loan for the operating company with an interest rate of Libor plus 150 basis points and an $80 million five-year term loan for the holding company with an interest rate of Libor plus 250 basis points, the syndicate source said.

Proceeds will be used to help finance the acquisition of the NBA basketball team by Boston Basketball Partners LP, according to the syndicate source, who added that the total acquisition price is $360 million.

Now that timing on the retail launch of TRW Automotive's credit facility has been narrowed down to the end of the month, details on the loan are beginning to surface.

The credit facility is currently expected to be approximately $1.81 billion in size. Institutional tranches will roughly make up about 50% of the facility and pro rata tranches will roughly make up the other 50% of the facility, a syndicate source told Prospect News.

Currently, lead banks are talking to potential senior management agents.

The company will use high yield bonds and the new credit facility to help pay the cash portion of the company's acquisition by the Blackstone Group from Northrop Grumman Corp.

JPMorgan, Credit Suisse First Boston, Lehman Brothers and Deutsche Bank are providing the necessary financing for the transaction.

Under the acquisition agreement, Northrop will receive $3.757 billion in cash, $600 million in debt securities and an initial $368 million equity interest in TRW Automotive (approximately 42%) for a total amount of $4.725 billion, according to a company news release.

TRW Automotive is a Livonia, Mich. diversified supplier of automotive systems, modules and components.

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