Essar Steel rises on amendment; Neiman better with August numbers; Capmark moves around

By Sara Rosenberg

New York, Sept. 3 - Essar Steel Algoma Inc.'s term loan was stronger by a few points on Thursday on the back of news that the company is seeking an amendment that will result in higher pricing and payment of a consent fee.

In other trading happenings, Neiman Marcus Inc.'s term loan headed higher following the company's release of August revenues numbers that, despite showing a year-over-year decline, were better than anticipated.

Also, Capmark Financial Group Inc.'s bank debt saw some movement in the secondary in reaction to the company possibly selling its North American servicing and mortgage banking business.

Essar Steel trades up

Essar Steel Algoma's term loan gained some ground during the trading session as investors reacted favorably to company's recently launched amendment, which results in some increased payments to lenders, according to a trader.

The term loan was quoted at 92 bid, 94 offered, up from Wednesday's levels of 90 bid, 92 offered, the trader said.

"Up with amendment. Fee payable and [increase in pricing]," the trader said.

Under the amendment, pricing on the term loan would be lifted to Libor plus basis points and a 1.5% Libor floor would be added to the tranche.

And, lenders are being offered a 50 bps amendment fee.

Essar Steel seeks covenant holiday

In return for the higher pricing and the consent fee, Essar Steel Algoma is asking lenders to eliminate the leverage and interest coverage ratio requirements for four quarters through the quarter ending June 30, 2010.

Also, the company would be required to pay down $50 million of its term loan debt by Dec. 31 or it will pay a 7% fee on the amount of outstanding loans.

The amendment was launched on Wednesday and consents are due at 5 p.m. ET on Friday.

"My understanding is that signature pages are coming in rapidly because people want to get out early tomorrow. Think the fact that they're asking for it so quickly is a pretty good reflection of their confidence in getting it done," the trader remarked.

UBS is the administrative agent on the credit facility.

Essar Steel Algoma is a Sault Ste. Marie, Ont.-based steel producer.

Neiman rises on revenues

Neiman Marcus' term loan was also stronger on Thursday, with traders attributing the improvement to better-than-expected August results.

The term loan was quoted by some traders at 82½ bid, 83½ offered and by others as high as 83 bid, 84 offered. By comparison, on Wednesday, the loan was seen at 82 bid, 83 offered.

For the four weeks ended Aug. 29, the company's total revenues were $241 million, down 15.3% from $285 million in the comparable period last year.

Comparable revenues for the month were $237 million, down 16.6% from $284 million in August 2008.

And, in August comparable revenues in the specialty retail stores segment, which includes Neiman Marcus Stores and Bergdorf Goodman, decreased 19.6% from the prior year.

The company said that the merchandise categories in the specialty retail stores segment that performed the strongest were ladies' shoes, precious jewelry, beauty and couture apparel.

Neiman Marcus is a Dallas-based high-end specialty retailer.

Capmark bounces around

Capmark Financial Group's bank debt saw a change in levels on the back of news that it may sell assets to Berkshire Hathaway Inc. and Leucadia National Corp., according to a trader.

The company's unsecured term loan was quoted at 20¼ bid, 21¼ offered, up from 19 5/8 bid, 20 5/8 offered on Wednesday, and its roll up loan was quoted at 72 bid, 73½ offered, down from 74 bid, 75 offered, the trader said.

On Wednesday, Capmark announced that it entered into an asset put agreement with Berkshire Hathaway and Leucadia, under which it has the right to sell its North American servicing and mortgage banking business for $490 million.

If the sale occurs outside of bankruptcy, the purchase price will consist of a $375 million payment in cash at the closing, a $40 million holdback retained by the buyers, and if the sale is completed in bankruptcy, the purchase price will consist of a $415 million payment in cash at the closing and a note.

Capmark is a Horsham, Pa.-based company that provides financial services to investors in commercial real estate-related assets.

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