Blockbuster floats pricing; Wendy's wraps revolver increase; LCDX slides with stocks

By Sara Rosenberg

New York, March 20 - Blockbuster Inc. revealed price talk on its proposed amended and extended revolving credit facility on Friday and Wendy's/Arby's Group Inc. completed the upsizing of its revolver, but at a smaller amount than was originally proposed.

Meanwhile, over in the secondary market, the cash market experienced very light activity and the LCDX 10 index was weaker with equities.

Blockbuster price talk

Blockbuster came out with expected pricing on the amended and extended revolving credit facility that it is working on as it filed the amendment term sheet in an 8-K with the Securities and Exchange Commission on Friday.

Pricing on the amended revolver is being outlined as Libor plus 1,000 basis points with a 3.5% Libor floor.

The purpose of the amendment is to extend the revolver maturity to Sept. 30, 2010 and waive any default arising from a going concern opinion by the company's auditors.

JPMorgan, the administrative agent on the deal, and two of the largest lenders have already agreed to the changes - which represents 65% of the expected total principal amount of the facility, or around $250 million.

Blockbuster exploring existing and new orders

Now that agreements with the major lenders have been reached, Blockbuster is inviting other existing lenders, as well as some new lenders, to commit to the extension and amendment, the filing said, and the hope is to fund within the next 60 days.

Any existing revolver commitments that are not extended will be terminated.

Covenants under the amended deal include a fixed-charge coverage ratio of 1.25 to 1.00 for March 31 through Jan. 3, 2010, and 1.30 to 1.00 thereafter, a leverage ratio of 2.75 to 1.00, and capital expenditures limitations of $30 million in fiscal 2009, and $40 million in fiscal 2010, plus up to $10 million in carry over from the prior year.

There are also mandatory repayments of $25 million on Dec. 15, $20 million on Jan. 31, 2010, Feb. 28, 2010 and March 31, 2010, $10 million on April 30, 2010, $15 million on May 31, 2010, $50 million on June 30, 2010, and $10 million on July 31, 2010 and Aug. 31, 2010.

Proceeds will be used for general corporate purposes.

Blockbuster is a Dallas-based operator and franchiser of entertainment-related stores.

Wendy's/Arby's revolver upsized

Wendy's/Arby's finished the increase to the size of its revolver, but instead of adding $100 million to the deal, the company only ended up adding $70 million, according to a market source.

With the increase, the total revolver size is now $170 million.

The upsizing was done in connection with the cancellation of the Wendy's International Inc.'s $200 million revolver, which was part of a recently completed amendment that called for the combination of Wendy's and Arby's Restaurant Group Inc. bank debt into one credit facility.

Although the amendment passed on March 6, completion of the revolver increase took a little longer to get done.

Wendy's/Arby's amended facility details

Wendy's/Arby's amended credit facility is priced at Libor plus 400 bps with a 2.75% Libor floor.

Pricing prior to the amendment was Libor plus 225 bps. At first, the company was offering to raise pricing to Libor plus 350 bps, but the spread had to be raised in order for the amendment to get approved.

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

Citigroup acted as the lead bank on the amendment and on the revolver upsizing.

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

LCDX softens

Switching over to trading news, the LCDX 10 index headed lower on Friday as stocks weakened, according to a trader.

The index was quoted at 72.25 bid, 72.55 offered, down from Thursday's levels of 72.70 bid, 73 offered, the trader said.

Meanwhile, Nasdaq closed down 26.21 points, or 1.77%, Dow Jones Industrial Average closed down 122.42 points, or 1.65%, S&P 500 closed down 15.5 points, or 1.98%,and NYSE closed down 105.09 points, or 2.13%.

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