Cash, LCDX grind lower; Venetian Macau continues to slide; JBS USA raises term loan price talk

By Sara Rosenberg

New York, Oct. 6 - The cash market and LCDX 10 had a pretty bleak day as buyers continued to be hard to find and the general outlook on the economy remained depressing, and Venetian Macau's term loan, which experienced a major drop at the end of last week, saw levels come off even further on Monday.

In other news, JBS USA has increased the price talk and original issue discount guidance on its term loan.

The cash market in general and LCDX 10 were both weaker on Monday as there continued to be a lack of buyers and general economic concerns continued to plague investors, traders told Prospect News.

The cash market overall was down one to two points, according to one trader, and one to three points, according to a second trader.

Meanwhile, LCDX 10 was quoted as going out at 90 bid, 90.40 offered by the first trader and at 90 bid, 90.30 offered by the second trader. On Friday, the index went out around 91 bid, 91.20 offered.

Equities ended the day down as well, with Nasdaq off 84 points, or 4.32%, Dow Jones Industrial Average off 369.88 points, or 3.58%. S&P 500 off 42.34 points, or 3.85%, and NYSE off 334.03 points, or 4.71%

"Lehman Commercial Paper filed for bankruptcy. They didn't file before so you thought they might have survived it. Maybe didn't contribute to the fall but definitely another concern," the first trader said.

The trader went on to say that the main problem is that there is just a whole lot of selling pressure in the secondary market right now.

"No buyers out there. Hedge funds and prime funds not buying because they have redemptions. CLOs, CDOs not buying because they have no cash. And, banks not buying because concerns about the future," the trader said.

"I don't think you can find one asset class other than Treasuries and gold that isn't down today," the second trader remarked.

"General economic picture seems pretty grim. There's a few [buyers]. Things are trading in small size. Definitely no one stepping in and really buying that much," the trader added.

Venetian Macau falls some more

Venetian Macau's term loan posted additional losses during the session, after experiencing a massive slide on Friday, but this time the negative momentum was primarily attributed to the overall market being down, according to a trader.

The term loan was quoted at 69 bid, 71 offered, down from Friday's levels of 70 bid, 73 offered and Thursday's levels of 81 bid, 82 offered, the trader said.

The trader explained that on Friday, the paper gave up around 10 points as a result of talk that the company may not refinance the credit facility as planned, but rather do project specific financing.

As was previously reported, the company is attempting to market a new credit facility in Asia. The company was targeting to raise about $5 billion in new bank debt from Asian banks, but for a while now, rumors have been going around that the financing is having some problems.

"Considering. Nothing definite," the trader added regarding the potential change in financing plans.

Other bad news that has hit Venetian Macau recently is last week's revelation that new visa restrictions have been enacted that reduces the number of travelers going into Macau.

Venetian Macau is a subsidiary of Las Vegas Sands Corp., a Las Vegas-based hotel, gaming, resort and exhibition/convention company,

JBS revises talk

Switching to the primary market, JBS USA sweetened the spread talk and original issue discount on its $500 million six-year term loan, according to a fund manager.

The term loan is now being talked at Libor plus 750 basis points, up from original talk of Libor plus 550 bps, and the original issue discount is now being guided at 96, up from 97, the fund manager said.

As before, the term loan has a 3.25% Libor floor.

JBS USA is also currently in market with a five-year ABL revolver that was launched with a size of $750 million. Chatter is that the revolver may end up with a smaller size but nothing official has been announced as of yet, the fund manager added.

The revolver is still being talked at Libor plus 275 bps with a 37.5 bps commitment fee. Prior to launching, early guidance on the revolver had been in the Libor plus 250 bps to 275 bps area.

At launch, lenders were told that upfront fees on the revolver are 1 bps per million.

Credit Suisse and GE Capital are the lead banks on the deal, with Credit Suisse the left lead on the term loan and GE the left lead on the revolver.

Proceeds will be used to help fund the acquisitions of Smithfield Beef Group Inc. and National Beef Packing Co. LLC by parent company JBS SA.

JBS SA is purchasing Smithfield Beef, a beef processing and cattle feeding operation, from Smithfield Foods Inc. for $565 million in cash.

National Beef is being bought by JBS SA from U.S. Premium Beef LLC for $465 million in cash and $95 million in common stock. In addition, JBS will assume all of National Beef's debt and other liabilities at closing.

JBS USA is a meat processing and packaging company.

Wrigley closes

Mars Inc. completed its acquisition of Wm. Wrigley Jr. Co. for $80 per share in cash, according to a news release.

To help fund the transaction, Wrigley Co. got a new $4.85 billion senior secured credit facility, consisting of a $250 million revolver priced at Libor plus 325 bps, a $1 billion term loan A priced at Libor plus 325 bps, and a $3.6 billion term loan B priced at Libor plus 350 bps, with a 3% Libor floor and 101 soft call protection for one year.

The term loan B was sold to investors at an original issue discount of 99.

During syndication, pricing on the term loan B was reverse flexed from initial talk of Libor plus 375 bps, the original issue discount was reduced from 97 and the soft call protection was added.

Goldman Sachs acted as the lead arranger on the deal, and Barclays, GE Capital, Rabobank and Sumitomo were co-arrangers.

In addition to helping fund the acquisition, proceeds from the credit facility will be used to provide for ongoing working capital and general corporate purposes.

Confections company Wrigley Co. is being operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

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