Georgia-Pacific amendment passes, term B fades; GM, Ford bounce around on rescue speculation

By Sara Rosenberg

New York, Dec. 12 - Georgia-Pacific Corp.'s recently revised amendment ended up being approved by lenders since the increase in pricing and adjustment to the leverage ratio were enough to tempt lenders into consenting, and the company's term loan B traded lower on Friday being that the fee was paid and the market was down.

In other news, General Motors Corp. and Ford Motor Co. weakened in the morning, but then pretty much came back to unchanged levels on various chatter about a still possible bailout, and Lear Corp.'s term loan held steady despite the withdrawal of full-year guidance.

Georgia-Pacific amendment gets lender OK

Georgia-Pacific's amendment proposal got enough consents from lenders to pass once the pricing bump was added and the total leverage covenant was tweaked, according to a market source.

Consents had been due at the close of business on Thursday, and the changes to the amendment had been announced on Thursday morning.

Under the amendment, lenders are getting pricing of Libor plus 200 basis points out of the gate on the company's revolver, term loan A and term loan B, and if leverage is above 4.5 times, pricing will move up to Libor plus 300 bps. The revolver was previously priced at Libor plus 175 bps, and the term loan A and the term loan B were previously priced at Libor plus 150 bps. Originally, no change in pricing was being offered.

Also, the amendment revises the leverage covenant to 5.25 times in 2008 and 2009, and 5.0 times in 2010. By comparison, under the original proposal, the leverage covenant was going to be 5.25 times all the way through 2010. Without the amendment, the covenant would have moved from 5.25 times currently to 4.5 times in 2009 and 4.25 times in 2010.

Furthermore, in connection with the amendment, the company is repaying $400 million of its term loan B and $100 million of its term loan A, and lenders are getting a 100 bps amendment fee.

Citigroup led the amendment process.

Georgia-Pacific softens

Georgia-Pacific's term loan B was weaker in trading during the Friday session, dropping partially because the amendment fee was already paid so that was removed from the trading value of the debt, and dropping partially with the rest of the market, according to a trader.

The term loan B was quoted at 75½ bid, 76½ offered, excluding the one point amendment fee, down from Thursday's levels of 77¼ bid, 78¾ offered, the trader said.

"Today trading without fee. Yesterday was with fee, so that accounts for one point. Rest of it is because the market is stinky. Market down about a point," the trader added.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

GM, Ford seesaw

General Motors and Ford saw their term loan debt bounce around on Friday, first moving lower in the morning hours and then rebounding to end the day pretty much unchanged, according to a trader.

General Motors, a Detroit-based automaker, saw its term loan quoted at 43 bid, 45 offered, versus levels of 42 bid, 46 offered on Thursday, the trader remarked.

And, Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 39 bid, 40 offered, versus levels of 37½ bid, 40½ offered on Thursday, the trader continued.

"Expectation there might be some rescue this weekend," the trader added.

Recently news emerged that the Senate did not pass the bill that would have granted the auto companies, including Chrysler LLC, $14 billion in funds to help save them from bankruptcy.

However, after talk of that failure hit, new speculation emerged that the government might find another way to help these companies, such as accessing the funds that were earmarked for the Wall Street bailout.

Lear steady on guidance removal

Lear's term loan actually remained at basically unchanged levels during the trading session even though the company pulled its guidance, according to a trader.

The term loan was quoted at 46 bid, 47 offered, which is where it pretty much was on Thursday, the trader said.

"No one is really surprised they pulled their guidance," the trader added.

Lear guidance removed on sector weakness

On Friday, Lear announced that it was withdrawing its full-year 2008 financial guidance as a result of further weakness in global automotive demand and overall industry uncertainty.

"The weakness we are seeing in global automotive production, as well as the very fluid industry environment is unprecedented. In response, we have been aggressively attacking our cost structure and pro-actively managing our liquidity position," said Bob Rossiter, chairman, chief executive officer and president, in a news release.

Lear is a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and electronics products.

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