Dean Foods dips with numbers; GM softens; Ford rises; PharmaNet price talk sees no resistance

By Sara Rosenberg

New York, May 1 - Dean Foods Co.'s term loan B was a touch softer on Friday despite solid earnings and news of a potential debt reduction, and Ford Motor Co. and General Motors Corp. both released April sales results, but Ford's term loan moved a little higher with the news and General Motors' term loan moved a little lower.

Over in new deal happenings, investors are still working on PharmaNet Development Group Inc.'s proposed credit facility, but the hope is that the deal will wrap up at initial terms based on feedback received so far.

Dean Foods weakens

Dean Foods' term loan was quoted a little lower during the trading session even though the company's quarterly results were good and plans to lower debt were announced, according to traders.

The term loan B was quoted by one trader pretty wide at 93 bid, 96 offered, and by a second trader at 93 bid, 93¾ offered, down from 93½ bid, 94½ offered on Thursday.

The second trader remarked that he did see some people trying to move the term loan B higher by offering it at around 95, but it didn't look like that level stuck, so chances are those offers didn't get hit.

Dean Foods earnings improve

For the first quarter, the company reported net income of $75.3 million, or $0.48 per diluted share, compared to net income of $30.8 million, or $0.21 per diluted share, in the prior year's first quarter.

On an adjusted basis, net income was $81.4 million, or $0.52 per diluted share, compared to $32.4 million, or $0.23 per diluted share, in first quarter 2008.

Net sales for the quarter totaled $2.7 billion, a decrease of 12% from $3.1 billion of net sales last year.

"Clearly, the business was very strong in the first quarter, and we are off to a fast start in 2009," said Gregg Engles, chairman and chief executive officer, in a news release. "Both of our operating segments contributed to the strong results, and we continued to move forward on our strategic initiatives."

Dean Foods reduces debt

During the first quarter, Dean Foods decreased its outstanding debt by $121 million, to end the quarter with total debt of about $4.3 billion, net of $63 million in cash on hand.

The company's funded debt to EBITDA ratio declined to 4.45 times as of the end of the first quarter, which is below the final leverage covenant step down to 4.5 times that will take place on Dec. 31, 2010.

And, net cash provided by continuing operations for the first quarter totaled $184.7 million, compared to $158.3 million for the first quarter of 2008.

In addition on Friday, the company provided an outlook for the second quarter of adjusted diluted earnings of at least $0.38 per share, assuming the issuance of about $465 million of new shares of common stock.

For the full year, the company maintained its guidance of at least $1.55 of adjusted earnings per diluted share.

Dean Foods commences offering

Dean Foods also announced on Friday that it has commenced an offering of 22.5 million shares of common stock.

Proceeds from the offering will be used to repay the $122.8 million of its subsidiary's 6.625% senior notes due May 15.

Any remaining proceeds from the offering will be used to repay debt under the company's receivables-backed facility.

Dean Foods is a Dallas-based food and beverage company.

Ford inches higher

Ford's term loan was a little stronger on Friday as April sales numbers came out, which although down on a year-over-year basis, weren't that bad compared to last month's results, according to a trader.

The Dearborn, Mich.-based automotive company's was quoted at 63½ bid, 65 offered, up from 63¼ bid, 64¼ offered on Thursday, the trader said.

The company's revolver, meanwhile, was unchanged at 50 bid, 51 offered, the trader added.

For the month of April, Ford's total sales were 134,401, down 31.6% from 196,385 in April 2008. In March total sales were 131,465.

Total truck sales for the month were 77,435, down 33% from 115,593 last year. In March, total truck sales were 78,640.

And, car sales were 52,463, down 28.8% from 73,654 in April 2008. In March, total car sales were 46,467.

GM inches lower

On the flip side, General Motors' bank debt was a little softer on the day as it, too, announced April numbers, even though, like Ford, it also showed a pretty flat month compared to March but a fairly large drop from last year, according to traders.

The Detroit-based automotive company's term loan was quoted by one trader at 64 bid, 68 offered, and by a second trader at 66½ bid, 68 offered, down from 67 bid, 68½ offered on Thursday.

And, the company's revolver was quoted by the second trader at 54½ bid, 56 offered, down from 55 bid, 57 offered.

For the month of April, General Motors' total sales were 173,007, down 33.7% from 260,922 in April of the previous year. In March, total sales were 156,380.

Total truck sales were 101,232, down 27.7% from 140,098 last year. In March, truck sales were 87,503.

And, total car sales were 71,775, down 40.6% from 120,824 in April 2008. In March, car sales were 68,877.

LCDX softens

The LCDX 12 index was down a touch on Friday, while stocks were minimally higher, and the cash market in general felt firm although quiet, according to traders.

The index was quoted at 81.30 bid, 81.60 offered, down from 81.50 bid, 81.75 offered on Thursday, one trader said.

Meanwhile, Nasdaq closed up 1.9 points, or 0.11%, Dow Jones Industrial Average closed up 44.29 points, or 0.54%, S&P 500 closed up 4.71 points, or 0.54%, and NYSE closed up 55.40 points, or 1%.

PharmaNet hoped to clear at talk

Switching over to the primary market, PharmaNet Development Group's $95 million five-year credit facility has not received any push back from potential lenders on pricing since launching on April 22, according to a market source.

As a result, there is optimism surrounding the deal that it will fully syndicate at original terms, the source remarked.

The facility consists of a $20 million revolver and a $75 million term loan A.

Price talk on both tranches is Libor plus 600 basis points with a 3% Libor floor and an original issue discount of 97.

PharmaNet orders due soon

Commitments towards PharmaNet's credit facility are due from lenders on May 8, and currently, "Guys are still doing a lot work," the market source told Prospect News.

Both banks and institutional lenders have been approached about this deal.

Jefferies and CIT are the co-lead arrangers and co-bookrunners on the deal that will be used to refinance convertibles, with Jefferies the left lead.

PharmaNet is a Princeton, N.J.-based drug-development services company.

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