American Axle debt improves; Visteon is day's 'big mover'; Blockbuster still climbing higher

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Sept. 16 - The distressed debt market was "still going up," a trader said Wednesday. Riding that wave were a multitude of automotive parts suppliers and automotive-related credits.

American Axle & Manufacturing Inc., for one, saw its bonds moving up as much as 5 points. The gains came as the company announced its fourth waiver extension on its credit facility. However, with only two days until the next expiration date, many believe a restructuring agreement is nearing completion.

Also in the automotive arena, Visteon Corp.'s bonds improved significantly, traders reported. However, it was not clear what caused the rally.

Away from the autos, Blockbuster Inc. remained on its upward course. The movie rental chain's debt got an extra boost on word that the company was increasing a planned debt issue and would therefore be able to repay its term loan B in full.

Capmark Financial Group Inc. reportedly held a bondholder call during Wednesday's session. Though it was not known what was discussed during the call, the company's bonds gained at least 3 points by the end of business.

American Axle debt improves

American Axle & Manufacturing bonds gained 3 to 5 points, depending on the issue, following news that the company had extended a loan waiver and amendment to Thursday.

One market source saw the 5¼% notes due 2014 open around 72 - which was up 4 to 5 points from the day before - only to settle back down around 71 bid, 71½ offered.

Another source called the 7 7/8% notes due 2017 about 3 points better at 70 bid, 70½ offered.

Both sources noted that trading was on the active side.

The auto parts supplier said in a regulatory filing Wednesday that its lenders had granted a fourth waiver extension on its revolving credit facility. The waiver had previously been set to expire Sept. 15.

The current waiver requires American Axle to maintain a minimum daily liquidity of $75 million and can be terminated should the company fail to do so for four consecutive business days.

American Axle has been working with its lenders to amend the terms of its debt as it attempts to restructure outside of bankruptcy. The company believes the latest waiver will give it time to "finalize the definitive terms and conditions of such commercial agreements and financing arrangements," the company said in the filing with the Securities and Exchange Commission.

Given the short time frame of the waiver, it is widely believed that a deal is close to being completed.

"Since the waiver was only extended for two days, we assume the parties are close to being done," wrote Gimme Credit analyst Shelly Lombard in an afternoon note. "It doesn't appear that Axle's restructuring plans include any debt reduction, we think most of the negotiations must involve new covenants and an intercreditor agreement."

Still, she added, even if American Axle is successful in its restructuring endeavors, "it will still have a lopsided customer base with [General Motors] and Chrysler providing over 80% of its sales and a relatively leveraged balance sheet."

American Axle is a Detroit-based manufacturer of automotive axles.

Visteon 'big mover'

Elsewhere in the autosphere, Visteon's notes were deemed the day's "big mover" by at least one trader, though there was no news to explain what prompted the action.

The trader - quoting the debt generically, as the various issues tend to trade on top of each other - saw the bonds moving up to 23 from 14 previously.

At another desk, the 7% notes due 2014 jumped up about 4 points to 25 bid, 26 offered, while the 8¼% notes due 2010 were seen at 21 bid, 22 offered, also up 4 points.

Meanwhile, Sonic Automotive Inc.'s 8 5/8% notes due 2013 improved by as much as 5 points to 93 bid, 94 offered.

Sonic's gains came despite a report from Standard & Poor's in which the agency said it might lower its rating on the retailer.

"The rating action reflects the company's announced plan to raise new capital by selling 9 million shares of common stock and $125 million of long-dated convertible notes," S&P analyst Nancy Messer said in a statement. In addition, the agency noted that Sonic has very tight liquidity and near-term debt maturities, along with a highly leveraged balance sheet.

Visteon is a Van Buren Township, Mich.-based producer of interior control systems. Sonic Automotive is a Charlotte, N.C.-based automotive retailer.

Blockbuster debt climbing higher

News of an upsized bond issue gave Blockbuster's capital structure yet another boost during trading, traders reported.

A trader saw the 9% notes due 2012 closing at 73 bid, 74 offered, up another 2 to 3 points on the day. Another source echoed that market, though he called it only 1½ to 2 points better.

Blockbuster's term loan B also jumped up by a few points on the back of talk that the company upsized its bond offering and will now repay the B loan debt in full, according to a trader.

The term loan B was quoted at 98½ bid, 99½ offered, up from 96½ bid, 98½ offered, the trader said.

On Wednesday, Blockbuster increased its first-lien senior secured notes offering to $675 million from $340 million.

Under the original plans, the company was going to use the proceeds from the bond deal to repay all outstanding debt under its revolver and Canadian asset-based revolver and for general corporate purposes.

Now, as a result of the upsizing, the company is going to repay its term loan B in full as well, according to sources.

Blockbuster is a Dallas-based provider of in-home movies and game entertainment.

Capmark gains on call

Capmark Financial Group's bonds saw some improvement, a trader said, on the back of a bondholder call held Wednesday.

The trader pegged the 7 7/8% notes due 2012 around 27, up from 23 previously.

It was unclear what occurred in the call, but the company has been attempting to avert a potential bankruptcy.

Capmark Financial Group is a Horsham, Pa.-based financial services company.

Pilgrim's Pride releases DIP info

Pilgrim's Pride Corp. revealed on Wednesday that it is raising the size of its exit financing credit facility to $1.75 billion from $1.65 billion, according to a market source.

The increase is being done to the three-year revolver, which is now sized at $600 million as opposed to at $500 million.

All other terms of the credit facility remained unchanged, including the revolver pricing of Libor plus 450 basis points.

In addition to the revolver, the facility includes a $375 million three-year term loan A priced at Libor plus 500 bps and a $775 million five-year term loan B priced at Libor plus 500 bps.

The revolver, term loan A and term loan B were sold to investors with upfront fees.

The term loan B was pretty much syndicated to existing lenders who rolled over their commitments from an existing facility with CoBank.

CoBank, Rabobank and Bank of Montreal are the joint lead arrangers on Pilgrim's Pride's credit facility. CoBank and Rabobank were the original leads, but Bank of Montreal joined the team by committing $175 million in total to the revolver and term loan A.

Another $350 million in commitments towards the revolver and the term loan A came in during the agent round from Morgan Stanley, Barclays and ING.

The revolver, which is subject to a borrowing base, and the term loan A were sold pro rata.

Financial covenants under the facility include leverage, fixed-charge coverage and capital expenditures requirements.

Security is the company's fixed and current assets.

The change in size to Pilgrim's Pride's exit facility was released in conjunction with the announcement that JBS has agreed to purchase 64% of the new common stock of the reorganized company for $800 million in cash.

Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan.

Under the terms of the plan, all creditors of the debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares representing 36% of the reorganized company.

The plan is expected to be confirmed by the Bankruptcy Court in time for the debtors to emerge from bankruptcy before the end of December.

All commitments that were obtained for Pilgrim's Pride's exit facility during the syndication process that took place this summer are still valid even with the JBS news since lenders had to agree that their commitments would stand if someone came in and bought the company, the source added.

Pilgrim's Pride is a Pittsburg, Texas-based poultry processor. JBS is a Brazil-based beef producer and exporter.

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