GM, Ford slide; Idearc rises; Burger King inches up; Bid-Wanteds emerge; U.S. Silica delays deadline

By Sara Rosenberg

New York, Oct. 31 - General Motors Corp. and Ford Motor Co. both saw their term loans fall in trading on Friday as talk circulated that the government will not be providing financing, which is a big roadblock in the rumored General Motors-Chrsyler Corp. LLC merger.

In other trading news, Idearc Inc.'s term loan B was actually better despite a ratings downgrade as investors were feeling a bit more positive about the company's decision to hire advisors, and Burger King Holdings Inc.'s term loan was a touch stronger following the release of earnings.

Also in the secondary, two new Bid-Wanted-In-Competitions surfaced on Friday, with bids due from investors on Tuesday.

Over in the primary market, U.S. Silica Co. pushed off the commitment deadline for its term loan A as the company is waiting on getting ratings, but, depending on where ratings fall out, syndication of the deal appears to be going well.

GM, Ford soften

General Motors and Ford posted some losses as government funding for the companies now seems like it's not a possibility, according to traders.

"Treasury came out and said they're not going to put money into car companies, which probably means there's going to be no GM-Chrysler merger," one trader explained.

General Motors, a Detroit-based automotive manufacturer, saw its term loan quoted by one trader at 52½ bid, 56½ offered, down from 53½ bid, 57½ offered, and by a second trader at 53½ bid, 55½ offered, down from 56½ bid, 57½ offered.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted by one trader at 54bid, 55½ offered, down from 55½ bid, 59½ offered, and by a second trader at 53½ bid, 54½ offered, down from 56½ bid, 57½ offered.

Idearc trades higher

Idearc's term loan B shrugged off a ratings downgrade on Friday and moved up by a point as people starting thinking that the hiring of financial advisors may not be so bad, according to a trader.

The term loan B was quoted at 42 bid, 44 offered, up from previous levels of 41 bid, 43 offered, the trader said.

On Thursday, the company had announced that it retained Merrill Lynch & Co. and Moelis & Co. as financial advisors in connection with the review of alternatives related to its capital structure.

"People feel like what they hired Merrill to do could be positive for the bank debt," the trader explained.

The trader added that the advisors' news was overshadowed on Thursday by negative third-quarter numbers, which is why the bank debt had traded down from 44½ bid, 45½ offered in the previous session.

S&P cuts Idearc ratings

Not everyone was feeling optimistic about the hiring of advisors, as Standard & Poor's lowered Idearc's ratings on Friday morning because of the news.

The corporate credit rating on Idearc was downgraded to B- from B+, the senior secured credit facility rating was downgraded to B- from BB and the senior secured recovery rating was downgraded to 3 from 1. All ratings were placed on CreditWatch with negative implications.

"The ratings downgrade and CreditWatch listing reflects Idearc's announcement that it has retained Merrill Lynch & Co. and Moelis & Co. as financial advisors to review strategic alternatives related to the company's capital structure," explained Standard & Poor's credit analyst Emile Courtney in the release.

"Although Idearc has not disclosed the extent of the potential recapitalization and states that there are no assurances it will pursue one, we believe the probability has increased meaningfully that it may undertake significant transactions that we could deem as distressed exchanges," Courtney added.

Idearc also hurt by financial performance

S&P also said that negatively impacting Idearc's ratings is the fact that operating performance has deteriorated at the company.

The rating agency went on to say that it expects EBITDA could decline in the 20% area in 2008, compared to previous estimation of a roughly 10% decline.

As was reported on Thursday, Idearc's EBITDA for the third quarter dropped to $298 million, down 21.6% from $380 million last year, and adjusted EBITDA was $302 million, a 24.1% decrease from $398 million last year.

Revenues for the quarter were $735 million, down 7.1% from $791 million in the comparable period last year, net income for the quarter was $73 million, down 37.6% from $117 million in 2007, and adjusted net income was $76 million, down 40.6% from $128 million last year.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

Burger King better with numbers

Burger King's term loan gained some ground during the trading session after the company came out with financial results, according to a trader.

The term loan was quoted at 89½ bid, 91½ offered, up from 89¼ bid, 91¼ offered, the trader said.

For the first quarter of fiscal 2009, the company reported net income of $50 million, or earnings per share of $0.36, compared to net income of $49 million, or earnings per share of $0.35 in the comparable period last year.

Adjusted earnings per share, excluding $3 million of adjustments, increased 9% percent to $0.38 from $0.35 in the year-ago period. The adjustments consisted of expenses related to the acquisition of 72 franchise restaurants, specifically settlement charges and start-up costs.

Revenues for the quarter were $674 million, up 12% from $602 million in the same quarter last year.

Also, EBITDA for the quarter was $116 million, compared to $117 million last year, and adjusted EBITDA was $119 million, compared to $117 million last year.

Burger King generates cash, reaffirms outlook

During the quarter, the company generated $52 million of cash flow from operations, which was used to pay a cash dividend totaling $8 million, opportunistically repurchase $18 million of its shares, and invest $4 million on its U.S. and Canada reimaging program.

"Even amidst the current economic slowdown, our ability to generate solid cash flow is a fundamental benefit of our highly franchised business model," said Ben Wells, chief financial officer, in a news release. "And our strong balance sheet uniquely positions us to invest in the brand, driving future growth."

In addition on Friday, the company reaffirmed its full-year earnings per share guidance of $1.54 to $1.59 for 12% to 15% earnings growth, based on its outlook for continued positive comparable sales, significant restaurant development and increased income from operations.

Burger King is a Miami-based fast food hamburger chain.

Two Bid-Wanteds announced

Two new Bid-Wanted-In-Competitions were presented to lenders on Friday, totaling more than $800 million, according to a trader.

One of the portfolios is roughly $430 million comprised of more middle-market names, the trader said.

The other portfolio is roughly $396 million and "seems to be a little bit larger names," the trader added.

Bids are due from investors on Tuesday.

U.S. Silica keeps books open

Switching to new deal happenings, U.S. Silica decided to extend the commitment deadline for its $145 million seven-year term loan A because ratings from Moody's Investors Service and S&P have not come out yet, according to a market source.

A new deadline has not been set, but it is expected that once ratings come out, the books will probably close two or three days after that, the source said.

Originally, commitments were due from lenders this past Thursday.

U.S. Silica syndication progressing

U.S. Silica's term loan A is coming along pretty well despite the rating delay, with indications from lenders pointing to a successful syndication, the source said.

"Still building the book and taking bids. [There are] enough dollars working and waiting for credit [ratings] for the book to be filled," the source added.

Despite being called a term loan A, the deal is being marketed to a combination of banks and institutional investors.

There was no pre-marketing stage for this term loan and, currently, the company does not have an existing lender base. The company did get a credit facility about a year and a half ago, but that debt has already been taken out.

U.S. Silica has an existing $35 million ABL revolver that is going to remain in place following completion of the new term loan.

U.S. Silica loan terms

As was previously reported, U.S. Silica's term loan A is being talked at Libor plus 550 basis points with a 3.25% Libor floor and an original issue discount of 97.

Amortization on the term loan is 2% in the first two years, 11% in year three, 12% in year four, 15% in years five and six, and the remainder in year seven.

Covenants include total leverage, minimum interest coverage and minimum fixed charge coverage.

BNP Paribas is the lead bank on the deal.

Proceeds will be used to help fund the leveraged buyout of the company by Golden Gate Capital and Preferred Unlimited.

Total leverage will be in the 4½ times range and senior leverage will be 3.0 times.

U.S. Silica is a Berkeley Springs, W.Va.-based producer of ground and unground silica sand, kaolin clay, aplite and related industrial minerals.

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