Wendy's/Arby's amendment passes following tweaks; GM inches up; Ford holds steady

By Sara Rosenberg

New York, March 6 - Wendy's/Arby's Group Inc.'s credit facility amendment ended up being approved on Friday after the company revised the proposal so that lenders received a bigger pricing bump than was originally offered.

Meanwhile, over in the secondary market, General Motors Corp.'s term loan seemed to be a little higher on the day as news reports surged with speculation about a potential bankruptcy filing, although the company did come out and say that it is still focused on an out-of-court restructuring.

In other trading news, Ford Motor Co.'s term loan held firm after spending the last few days bouncing around a little bit on debt restructuring plans and Solutia Inc.'s term loan B was also steady as the company reiterated its full-year outlook and said that the first two months of the year have gone pretty well.

Wendy's/Arby's gets amendment

Wendy's/Arby's completed its credit facility amendment on Friday, but only after juicier pricing was announced on the deal and lenders were given until noon ET to throw in their consents, according to a market source.

Under the final version of the amendment, pricing on the facility is going to Libor plus 400 basis points with a 2.75% Libor floor.

By comparison, the original proposal called for pricing of Libor plus 350 bps with the 2.75% floor.

Pricing prior to the amendment was Libor plus 225 bps.

For their approvals, lenders were paid a 50 bps amendment fee.

Citigroup acted as the lead bank on the amendment.

Wendy's/Arby's gaining flexibility

The main purpose of the Wendy's/Arby's amendment was to combine the Wendy's International Inc. and Arby's Restaurant Group Inc. bank debt into one credit facility.

By creating this single facility, the company gains overall financial flexibility and maintenance of financial covenant compliance in 2009.

The amended deal uses Wendy's and Arby's combined results and more moderately leveraged balance sheet to determine covenant compliance, and enhances the company's ability to manage and deploy cash.

Under the combined model, the 2008 ratio of long-term debt/pro forma adjusted EBITDA was below 3.0 times.

Wendy's/Arby's still working on revolver

In connection with the amendment, Wendy's $200 million revolver is going to be canceled and Arby's will upsize its existing $100 million revolver to $200 million, the market source said.

However, this upsizing to the Arby's revolver is not yet completely done since that's a bit of a longer process than just an amendment, the source explained.

Wendy's/Arby's is an Atlanta-based quick-service restaurant company.

GM slightly better

General Motors' term loan was a little stronger on the day as the market was abuzz with bankruptcy chatter following an article in the Wall Street Journal, according to a trader.

However, in response to the article, General Motors did come out and say that "contrary to today's story in the Wall Street Journal, GM has not changed its position on bankruptcy."

General Motors claims that restructuring the business out of court remains the best solution and that it has established a clearly-defined plan for a restructuring that it is aggressively executing through a series of actions outlined in its Feb. 17 viability plan.

"As a prudent business measure, the company has analyzed various bankruptcy scenarios. However, the company firmly believes an in-court restructuring would carry with it tremendous costs and risks, the most significant being a dramatic deterioration of revenue due to lost sales," General Motors added in its release.

Amidst all this news, General Motors term loan was being quoted by one trader at 38 bid, 40 offered, up from 37 bid, 39 offered on Thursday, by a second trader at 37½ bid, 39½ offered, up from 37 bid, 39 offered, and by a third trader at wider levels of 35 bid, 40 offered.

GM bankruptcy talk follows going concern

The speculation on a bankruptcy for General Motors seemed to pick up after the company filed its 10-K with the Securities and Exchange Commission on Thursday, in which auditors issued the opinion that there is substantial doubt about the company's ability to continue as a going concern.

General Motors said in the filing that its future is dependant on the successful enactment of its viability plan that was presented to the government, and if this viability plan does not go through it may be forced to file for bankruptcy protection.

On Dec. 31, the company entered into a loan agreement with the U.S. Department of Treasury for funding of $13.4 billion, which was paid in three tranches.

In the viability plan filed with the Treasury on Feb. 17, General Motors included a request for additional government funding, as well as support from other governments outside of the United States so that it can continue operations until global automotive sales recover and its restructuring actions generate benefits.

General Motors is a Detroit-based automaker.

Ford stays firm

Ford's term loan was pretty flat on the day after spending the previous two trading sessions seesawing around, according to traders.

The term loan was quoted at 33 bid, 34 offered, unchanged from Thursday's closing levels, traders said.

By comparison, late Wednesday, the loan was quoted at 35 bid, 36 offered, and prior to the company's restructuring announcement on Wednesday the debt was seen at 29 bid, 33 offered.

As was already reported, Ford is planning to restructure its debt through tender and conversion offers that the company says would result in a significant reduction in its debt obligations and annual interest expense.

Ford tendering for loans

As part of the restructuring, Ford commenced a $500 million cash tender offer for its senior secured term loan debt, of which $6.9 billion is outstanding.

The term loan tender offer is being done as a Dutch auction in which lenders are being invited to submit bids to sell their term debt within a price range of 38 to 47.

If the aggregate purchase price for term loan debt tendered exceeds $500 million, Ford will purchase at the clearing price all loans tendered at a price below the clearing price and purchase loans tendered at the clearing price on a pro-rated basis.

In addition, the company is doing a $1.3 billion cash tender offer for its unsecured non-convertible debt securities, of which $8.9 billion is outstanding, and a conversion offer relating to its $4.88 billion of 4.25% senior convertible notes due Dec. 15, 2036.

Ford is a Dearborn, Mich.-based automaker.

Solutia holds in

Solutia's term loan B was unchanged on Friday at 59 bid, 63 offered, which according to a trader, was a pretty impressive feat considering the rest of the cash market was generically down by about a point.

Early on in the day, the company reaffirmed its full-year 2009 adjusted EBITDA guidance from continuing operations of $325 million to $350 million and its full-year 2009 total cash from operations less capital expenditures guidance of $25 million to $75 million.

"Overall, we are encouraged by the performance of our businesses so far in 2009. Revenue and adjusted EBITDA for the first two months met the company's expectations, with February results showing sequential improvement over January, despite fewer shipping days," said Jeffry N. Quinn, chairman, president and chief executive officer, in a news release.

"For continuing operations, our pricing philosophy and aggressive cost mitigation actions have allowed us to hold margins despite the slower demand environment," Quinn continued.

Solutia generates cash

Solutia also said on Friday that its total cash from operations less capital expenditures, including both continuing operations and discontinued operations, for the first two months of 2009 was modestly positive.

The company's total current liquidity is on par with year-end at about $145 million.

In addition, the company disclosed that it is continuing to actively pursue strategic alternatives for its Nylon business with multiple parties.

The company expects to be able to announce a disposition of the business by the end of the first quarter.

Solutia is a St. Louis-based performance materials and specialty chemicals company.

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