Autos fall; FTD narrows talk; Keeley OID expected at wide end; B/E sets talk; ATP, Krotz tweak deals

By Sara Rosenberg

New York, June 23 - The auto sector continued to be a big focus in trading on Monday as General Motors Corp., Ford Motor Co., Chrysler Financial Services LLC and Chrysler LLC all saw their term loan levels drop.

In other news, FTD Group Inc. has zeroed in on price talk for its term loan B now that private ratings have been received and Keeley Holdings Inc. is anticipating seeing its credit facility original discount firm up at the high end of guidance.

Also in the primary, B/E Aerospace Inc. came out with price talk on its credit facility as the deal was launched to investors during the Monday session, and ATP Oil & Gas Corp. and Krotz Springs raised pricing on their bank deals.

Once again, autos were under pressure in trading as investors continued to react to more production cuts, rating outlook changes and overall negativity in the sector, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 86¼ bid, 87¼ offered, down from 89 bid, 90 offered on Friday and from 90 bid, 91 offered on Thursday, the trader said.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 81½ bid, 82¼ offered, down from 82 bid, 83 offered on Friday and from 84 bid, 85 offered on Thursday, the trader continued.

Chrysler Financial Services LLC, a provider of financial services for vehicles in the NAFTA region, saw its first-lien term loan quoted at 85½ bid, 86½ offered, down from 87½ bid, 88½ offered on Friday and from 89 bid, 90 offered on Thursday.

And, Chrysler Auto saw its term loan quoted at 56 bid, 58 offered, down from 58 bid, 60 offered, the trader remarked. "I heard it was quoted as low as 50-55, but I think that was just someone trying to spook the market," the trader added.

On Monday, news emerged that General Motors will be reducing production of trucks and adding more buyer initiatives to deal with lower demand and high fuel prices.

News also came out that the company hired Citigroup to help evaluate the sale or revamping of its Hummer brand.

Meanwhile, on Friday, Ford announced that it was further reducing North American large truck and SUV production for the remainder of 2008, while adding more small cars, crossovers and fuel-efficient powertrains.

In addition, the company said that 2008 automotive results will be worse than 2007, cash outflows will be greater than previous guidance and, unless the economy improves, it will be difficult to break even companywide on a pre-tax basis in 2009, excluding special items.

As a result of falling U.S. vehicle demand and high fuel costs driving U.S. consumers away from light trucks and SUVs and toward more fuel efficient vehicles, on Friday, both Standard & Poor's and Moody's Investors Service changed the rating outlook on a number of the auto companies.

Standard & Poor's placed the corporate credit ratings of Ford, General Motors, Chrysler LLC, Ford Motor Credit Co., DaimlerChrysler Financial Services Americas LLC (Chrysler Financial) and GMAC LLC on CreditWatch with negative implications.

And, Moody's Investors Service changed Ford's, Chrysler LLC's and DaimlerChrysler Financial Services' outlook to negative from stable.

Cash, LCDX down

In more trading news, the cash market in general was softer on Monday as was LCDX 10 on continued weakness in the economy, according to a trader.

The cash market was down about an eighth to a quarter of a point, excluding autos, the trader said, explaining that "obviously autos were down more."

And, LCDX was quoted at 98.50 bid, 98.60 offered, down slightly from 98.55 bid, 98.65 offered on Friday.

"It was active in the morning. Not so much in the afternoon," the trader added about the index.

FTD specifies B loan guidance

Switching to the primary market, FTD Group has focused in on the price talk for its $200 million six-year term loan B following the receipt of private ratings on the deal from the rating agencies, according to a market source.

The term loan B is being talked at Libor plus 450 basis points with a 3% Libor floor and an original issue discount of 98, the source said.

At launch, pricing guidance on the term loan B came out in the context of Libor plus 400 bps to 450 bps, with a 3% Libor floor and an original issue discount in the 98 to 99 range - but it was said that the actual talk would be dependant on credit ratings.

FTD's $450 million credit facility also includes a $75 million five-year revolver and a $175 million five-year term loan A, with both of these tranches talked at Libor plus 350 bps with a 3% Libor floor.

Upfront fees on the revolver and the term loan A are 50 bps for commitments of less than $25 million, 75 bps for commitments in the $25 million to $35 million range and 100 bps for commitments of more than $35 million.

As for how the deal is progressing, the source said that the "books are doing well."

Financial covenants under the credit facility include a leverage ratio, a fixed-charge coverage ratio and a maximum capital expenditures requirement.

Wells Fargo is the lead arranger, bookrunner and administrative agent on the deal that will be used to help fund United Online Inc.'s acquisition of FTD for $7.34 in cash, 0.4087 of a share of United Online common stock and $3.31 principal amount of United Online 13% senior secured notes due 2013 per share.

The total consideration to FTD stockholders will be about $456 million, consisting of $222 million in cash, 12.35 million shares of United Online stock and $100 million total principal amount of notes.

The remaining purchase price consists of repayment of FTD debt and expenses incurred in connection with the transaction.

Total and senior leverage at close will be 3.6 times.

Commitments toward the credit facility are due on Friday. Originally, the commitment deadline was set for this Tuesday, but it was pushed back as a result of the private ratings taking longer than expected to surface, the source added.

Upon closing of the transaction, the former FTD stockholders will own about 15% of United Online.

The acquisition is anticipated to be completed during the third quarter, subject to approval of FTD stockholders, a financing condition and customary closing conditions.

After the closing of the transaction, FTD will continue to operate as a wholly owned subsidiary of United Online from FTD's existing facilities, including its U.S. headquarters in Downers Grove, Ill., and its international headquarters in the United Kingdom.

FTD is a provider of floral related products and services. United Online is a Woodland Hills, Calif., provider of consumer internet and media services.

Keeley focuses on high end of OID talk

The original issue discount on Keeley Holdings is "most likely" going to end up at 98, the wide end of the 98 to 99 guidance that was announced at launch, according to a market source.

However, pricing has not fully firmed at this point as there are still some people working on the deal, the source explained.

"Hope to have people circled up by the end of this week," the source added.

Keeley's $185 million five-year credit facility consists of a $10 million revolver and a $175 million amortizing term loan that has a 75% excess cash flow sweep.

Both tranches are being talked at Libor plus 475 bps with a 3% Libor floor.

Bank of Montreal and CIT are the lead banks on the deal, with Bank of Montreal the left lead.

Proceeds will be used to help fund TA Associates' purchase of a minority interest in the company.

Opening senior leverage is in the low 2s.

Keeley is a Chicago-based investment manager that has about $9 billion in asset under management.

B/E Aerospace talk surfaces

B/E Aerospace held a bank meeting on Monday to kick off syndication on its proposed $925 million senior secured credit facility (BBB-), and in connection with the launch, price talk was announced, according to a market source.

Both the $575 million six-year term loan and the $350 million five-year revolver were presented to lenders with talk of Libor plus 275 bps with a 3% Libor floor, the source said.

Lenders are being offered the term loan at an original issue discount of 981/2, the source added.

Previously, based on the commitment letter, it was thought that the credit facility would be sized at up to $1.55 billion, with the difference being that the term loan was sized at up to $1.2 billion - although the company thought it was going to need only around $1 billion of that amount.

However, the size of the term loan was reduced after the company opted to go ahead with a $500 million senior notes offering that was first announced on Monday morning.

JPMorgan, UBS and Credit Suisse are the joint lead arrangers and joint bookrunners on the credit facility, with JPMorgan the administrative agent.

Covenants include an interest coverage ratio and a total leverage ratio.

Proceeds from the term loan and the notes will be used to help fund the acquisition of Honeywell International Inc.'s Consumables Solutions distribution business and to repay existing bank debt. The revolver, which is expected to be undrawn at close, will be available for working capital and general corporate purpose.

Commitments from investors are due on July 10.

The Honeywell business is being acquired for $800 million in cash plus $250 million in common stock or cash, at the company's option, although in no event will less than 6 million shares be issued if the value of the stock component is less than $250 million.

The transaction is expected to close in the third quarter subject to customary closing conditions, including U.S. antitrust notification and reports pursuant to the Hart-Scott-Rodino Act as well as German antitrust approvals.

As of March 31, the company's debt-to-capital ratio on a pro forma basis after giving effect to the transactions would have been 41.7% and pro forma net debt would have been $1.046.8 billion.

B/E Aerospace is a Wellington, Fla.-based manufacturer of aircraft cabin interior products and an aftermarket distributor of aerospace fasteners.

ATP lifts pricing, OID

ATP Oil & Gas came out with some changes to its $1.6 billion credit facility, including flexing pricing higher and increasing the original issue discount, according to a market source.

Both the $1 billion 5.5-year term loan and the $600 million 2.5-year asset sale bridge loan are now priced at Libor plus 525 bps, up from original talk at launch of Libor plus 475 bps, and are being offered at a discount of 971/2, up from 98, the source said.

The deal's 3.25% Libor floor was left unchanged, the source added.

The 5.5-year term loan carries call protection of 102 in year one and 101 in year two.

Pricing on the asset-sale loan will go up by 50 bps on July 1, 2009 and increase by an additional 50 bps every six months following that date.

Credit Suisse is the lead bank on the deal that will be used to refinance the company's existing credit facility and to repay $230 million of senior unsecured debt.

Commitments were due from lenders at the end of the day on Monday.

ATP is a Houston-based oil and gas acquisition, development and production company.

Krotz flexes up

Krotz Springs also increased pricing on its credit facility, changing the spread on its $295 million of institutional bank debt to Libor plus 750 bps from Libor plus 550 bps, according to a market source.

Tranching on the deal is comprised of a $245 million six-year first-lien term loan (B1/B+) and a $50 million letter-of-credit facility (B1/B+) to support substantial hedging.

The institutional debt still has a 3.25% Libor floor, is being offered at an original issue discount of 96 and is non-callable for one year, then at 101 in year two, the source said.

Earlier on in syndication, the original issue discount on the institutional debt was widened from an originally proposed 98 level.

Krotz Springs' $720 million credit facility also includes a $425 million ABL revolver that has a $75 million accordion feature and will be used to support working capital needs.

Credit Suisse is arranging the term loan and letter-of-credit facility, and Wachovia provided the revolver commitment.

Proceeds will be used to help fund Alon USA Energy, Inc.'s acquisition of the Krotz refinery from Valero Energy Corp. for $333 million in cash plus an amount for working capital, including inventories, to be determined at closing. The equity contribution for the deal totals $105 million.

Total leverage at Krotz (opco debt) will be 0.9 times.

Alon said previously that it expects that the transaction will generate strong free cash flow that should enable substantial delevering of the debt within three years.

The transaction is expected to close during the latter portion of the second quarter or early in the third quarter, following satisfaction of customary conditions, including regulatory approvals.

Krotz Springs is an 85,000 barrel-per-day refinery located in Louisiana. Alon is a Dallas-based refiner and marketer of petroleum products.

Gavilon closes

Ospraie Management completed its acquisition of Gavilon Group LLC from ConAgra Foods Inc. for roughly $2.8 billion, according to a news release.

To help fund the transaction, Gavilon got a new $1.75 billion asset-based revolver (Ba1) that is priced at Libor plus 250 bps, with a 37.5 bps commitment fee.

During syndication, the revolver was upsized from $1.5 billion.

JPMorgan and BNP Paribas acted as the joint lead arrangers and bookrunners on the deal. Other bookrunners on the deal included BOTM, ING, Societe Generale, Barclays, Calyon, Fortis, Credit Suisse and CoBank.

Gavilon, which was previously known as ConAgra Trade Group, is an Omaha, Neb., grain merchandising, fertilizer distribution, agricultural and energy commodities trading and services, and grain, animal and oil seed byproducts merchandising and distribution business.

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