LCDX drops 1.4 points; Tribune OID expected in 97 to 99 range; Blockbuster seen as a DIP-like deal

By Paul A. Harris

St. Louis, March 30 - The LCDX 10 index gave up 1.4 points on the day to close at 72.8 bid, 73 offered, according to a bank loan trader.

"The market is a touch weaker today on the heels of a big drop in equities," said another trader, referring to moves lower in the major U.S. stock indexes; the S&P 500, for example, dropped by slightly less than 3.5%.

"Overall it has been pretty quiet, in terms of volumes," the source added.

Yet another trader marked the Monday market in cash loans ½ point lower.

Tribune seen at 1 to 3 discount

OID talk is expected to surface Tuesday on the Tribune deal, according to an informed source.

However the buzz has the deal coming discounted to a range of 97 to 99, a market source said late on Monday.

The $225 million one-year accounts receivable securitization facility is expected to feature a $75 million revolver and the $150 million term loan, both at Libor plus 600 basis points with a 3% Libor floor, sources say.

The all-in yield is expected to be 10% to 12%.

Proceeds will be used to refinance an interim $300 million accounts receivable securitization debtor-in-possession financing facility.

Barclays is the lead bank.

Blockbuster views as DIP-like

Elsewhere the Blockbuster Inc. revolver extension deal has been taking on DIP-like characteristics, a banker said on Monday.

Pricing is believed to have pushed out to Libor plus 1,100 bps from the original 1,000 bps, the source added.

There also a 3.5% Libor floor and a 3% exit fee due upon repayment or refinancing the source said, adding that participation in the deal is believed to be moving from banks to hedge funds.

Silverpoint Capital LP and Monarch Capital Management are believed to be involved in the deal, the source added.

JPMorgan is the lead bank.

Under the extension, the maturity date of the revolver will be pushed out to Sept. 30, 2010. Any revolver commitments that are not extended will be terminated.

Covenants in 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 after that, 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.

TNS subscribed

Elsewhere the market is awaiting allocations on the TNS deal, sources said on Monday.

The roadshow is completed and the deal is well subscribed, according to an asset manager who works for a mutual fund on the East Coast.

The $250 million incremental term loan (B1) due March 28, 2014 is talked at Libor plus 600 bps with a 3.5% Libor floor, an original issue discount of 90, and 101 soft call protection for one year.

Amortization on the loan is 7.5% in the first year, 10% in the second and third years and 12.5% in the fourth and fifth years.

Proceeds from TNS' newly launched term loan will be used to help fund the acquisition of VeriSign Inc.'s communication services group for $230 million in cash.

SunTrust is the bookrunner.

Playing to banks and institutions

A banker not in the TNS deal conceded that the all-in price to the issuer will be considerable.

"Institutions are presently seeking amortizations in the deals they're playing," the banker said.

"They used to be fine doing seven years or eight years at 1% per annum. Now they would like to get a little bit more.

"Also right now you probably need to attract both banks and institutions. So you have to have the amortizations for the banks, and the deep discounts for the institutions.

"Given those conditions it costs the issuer quite a bit."

Manitowoc eases in trading

Trading in secondary issues was light on Monday, sources said.

Loan paper of the Manitowoc Co. Inc. traded lower after the company cut earnings estimates and warned that it could violate debt covenants during the second half of 2009.

The Manitowoc loan finished at 72½ bid, 77½ offered, down ½ point on the day, a trader said.

Meanwhile the loan paper of Ford Motor Co., which has rallied substantially in recent weeks, dropped ¼ to ½ point on Monday, a trader said, spotting the paper 47 bid, 51 offered.

Another trader spotted Ford loan paper going out at 47½ bid, 48½ offered, unchanged from the morning.

"People seem to think that Ford is going to sell the Volvo unit, which would supposedly result in a 50% paydown of the term loan," the trader recounted.

"So Ford has been a little stronger in the past few weeks."

Meanwhile an asset manager recalled that prior to the mid-March rally in the stock market, Ford loans had dropped as low as the low 30s.

Elsewhere on Monday First Data Corp.'s term loan traded ½ point higher to 67½ bid, 68½ offered, across the B-1, B-2 and B-3 tranches, according to a trader who added that the move did not seem predicated upon any specific news.

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