Georgia Gulf gains on swap revision; Lear mixed on restructuring details; Tribune notes steady

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., July 6 - Distressed debt traders came back after the long holiday weekend to find a subdued trading market Monday.

"It was truly remarkable," said one trader. He added that the secondary world saw less than $750 million in volume.

"This morning, I think everyone thought the world was going to end and then it didn't. So then nobody knew what to do," the trader opined. "Nobody cared about anything, nobody wanted to do anything."

Distressed sources did, however, note that Georgia Gulf Corp. had improved over the weekend, as investors digested a new revised debt exchange offer, announced on Thursday. Come Monday, the news was given credit for 2- to 3-point gains in the company's debt.

Meanwhile, Lear Corp. remained in the news. The company released new details of its restructuring agreement with lenders and bondholders. But the news caused mixed reactions in the automotive parts supplier's debt structure.

Tribune Co.'s notes closed the day out unchanged, despite news that the company's owners were close to selling the Chicago Cubs. The bankruptcy court overseeing the company's case, as well as Major League Baseball, must approve any sale of those assets.

Georgia Gulf gains on swap revision

Traders saw Georgia Gulf's notes gaining 2 to 3 points on the first day of trading after the holiday weekend. The improvement was attributed to news last week regarding the company's debt exchange offer.

One trader saw the 10 ¾% notes due 2016 move up to 12 from around 8. Another trader pegged the issue at 12 bid, 12.5 offered.

Yet another source called the debt nearly 3 points better at 11.75 bid, 12.75 offered.

On Thursday, the Atlanta-based chemical company announced a completely revised debt swap, which would give noteholders up to 96% of the company's equity.

Under the terms of the offer, Georgia Gulf will swap all of its notes for 32.05 million shares of new convertible preferred stock and 1.43 million shares of common stock, after a planned one-for-25 split goes into effect. The preferreds are convertible on a one-for-one basis.

Upon completion of the split, there will be 3 million shares that are authorized. The remaining shares must be approved at a special shareholders meeting.

Each $1,000 principal amount tendered will receive 47.30 shares of the convertible preferreds and 2.11 shares of the common shares. Holders of senior subordinated issues, however, will receive only 18.36 preferred shares and 0.82 common shares.

Additionally, the company entered into an agreement with noteholders to ensure its debt would not be accelerated before July 15.

The offer expires at midnight ET on July 16.

Lear mixed as details emerge

Lear's debt remained topical, as the company issued new details about its proposed restructuring plan.

A trader said $7.5 million of the 8½% notes due 2013 traded at 38.5. Another trader quoted the notes generically at 38 bid, 39 offered, calling that "up some."

However, Lear's term loan weakened during market hours, according to traders.

The term loan was quoted by one trader at 75 bid, 76 offered, and by a second trader at 75¼ bid, 77¼ offered, down from 77 bid, 79 offered on Thursday.

According to the newly released details of the plan, the company would restructure approximately $2.3 billion of debt outstanding under its amended and restated credit and guarantee agreement, and approximately $1.3 billion of debt outstanding under its 8½% senior notes due 2013, 5¾% senior notes due 2014, 8¾% senior notes due 2016 and zero-coupon convertible senior notes due 2022.

Lear has received commitments for a $500 million debtor-in-possession one-year term loan, which can be extended to 15 months, that is being led by JPMorgan and Citigroup. Proceeds will be used for working capital and other general corporate needs.

The DIP financing will convert into exit financing term loan with a three-year term upon the company's emergence from Chapter 11.

The company is seeking support for the proposed plan of reorganization from additional lenders and bondholders, and if the support is obtained, a bankruptcy filing would take place shortly thereafter.

Lear said on Monday in an 8-K filed with the Securities and Exchange Commission that its new capital structure upon exiting bankruptcy would consist of the up to $500 million exit financing first-lien term loan, a $600 million second-lien term loan and $500 million of series A convertible preferred stock.

There would also be a single class of common stock, including sufficient shares to provide for management equity grants, the issuance to the lenders of warrants to purchase common stock with a value of up to $25 million and the issuance to the holders of senior notes and certain other general unsecured claims of warrants to purchase 15% of the new common stock.

Specifically, senior credit facility claims would receive its pro rata share of the new second-lien term loan, the convertible preferred stock and approximately 26% of the new common stock.

Senior notes and other unsecured claims would receive approximately 46% of the new common stock and warrants to purchase 15% of the new common stock.

And, existing equity claims would have no recovery.

Lear is a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and electronic products.

Tribune unchanged on Cubs sale

Newspaper publisher Tribune saw its bonds end the session unchanged, despite news that the company's owners had potentially sold the Chicago Cubs.

A trader said the 5¼% notes due 2015 were offered at 6, but there were "no real trades." Another market source placed the 4 7/8% notes due 2010 at 7 bid, 8 offered, unchanged on the day.

News reports on the Chicago Tribune's web site, as well as other non-Tribune related outlets, said that Tribune had inked a close to $900 million deal with the Ricketts family. Should the deal be approved by Major League Baseball and by the court overseeing Tribune's Chapter 11 case, the Ricketts would find themselves the owner of the Illinois ball club, as well as Wrigley Field.

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