Skype softens with refi plans; Ford rises on numbers; Cinram regains ground; Dole sets talk

By Sara Rosenberg

New York, Feb. 2 - Skype Technologies' term loan headed lower in trading on Tuesday after news emerged that the company will attempt to refinance the debt, and Ford Motor Co.'s term loans were better with the release of monthly sales results.

Also in the secondary, Cinram International Income Fund's term loan D rebounded a bit after taking a large hit during the previous day's activity as investors had time to digest the news of a canceled contract.

Meanwhile, over in the primary market, Dole Food Co. Inc. came out with price talk on its proposed credit facility as the deal was presented to lenders with a bank meeting early in the afternoon.

Skype term loan slides

Skype Technologies' term loan weakened during the trading session as lenders were told that the debt would be refinanced with a new loan that will be launched at the end of this week, according to a trader.

The existing term loan was quoted at par bid, par ½ offered, down from previous levels of 101½ bid, 102¼ offered, the trader said.

Specifically, to repay the existing term loan, the company will approach the market with an $800 million U.S. dollar and euro denominated term loan.

Syndication of the new term loan will kick off with a conference call on Friday.

JPMorgan, Barclays and RBC Capital Markets are the lead banks on the new term loan and were the leads on the existing loan as well.

Skype price talk

Skype's new U.S. term loan tranche is being talked at Libor plus 400 basis points with a 1.75% Libor floor, an original issue discount of 99¾ and 101 soft call protection for one year, sources said.

And, the new euro term loan tranche is being talked at Euribor plus 450 bps with an original issue discount of 981/2, and 101 soft call protection for one year, sources continued.

By comparison, the $700 million five-year term loan that would be taken out is priced at Libor plus 700 bps with a 2% Libor floor, and it was sold at an original issue discount of 971/2.

The existing term loan was obtained late last year to help fund the buyout of a majority stake in Skype from eBay Inc. by an investor group led by Silver Lake and including Joltid Ltd., the Canada Pension Plan Investment Board and Andreessen Horowitz.

Of the total existing term loan, $100 million is held by eBay and the investor group as a result of litigation with Joltid Ltd. and Joost NV that was settled during syndication of the original deal.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

Ford inches up

Ford's term loans moved higher on Tuesday following the company's release of monthly sales numbers that showed a year-over-year improvement, according to traders.

The term loan B-1 was quoted by traders at 93¾ bid, 94¼ offered, up from 93 3/8 bid, 93 7/8 offered.

As for the term loan B-2, that was quoted by one trader at 92¾ bid, 93¼ offered, up from 91¾ bid, 92¼ offered, and by a second trader at 92¼ bid, 93 offered, up a quarter of a point on the day.

For the month of January, total Ford sales were 116,534, up 24.6% from 93,506 in the comparable period last year.

Total car sales for the month were 41,050, up 43% from 28,707 in January 2009.

And, total truck sales were 71,356, up 15.3% from 61,889 in the previous year.

Ford is a Dearborn, Mich.-based manufacturer and distributor of automobiles.

Cinram recoups some losses

Cinram's term loan D came back a little in trading after experiencing a big slide on Monday on news that service agreements with Warner Home Video Inc. will terminate on July 31, according to traders.

The term loan D was quoted by one trader at 75 bid, 77 offered, up from 67 bid, 72 offered. A second trader, however, had the term loan D quoted at 75½ bid, 76½ offered, up from 74 bid, 76 offered where he said it moved up to late in the day Monday.

Prior to the announcement of the canceled agreements with Warner Home Video, the term loan D was being quoted in the 86½ bid, 88½ offered area.

Warner Home Video revenues for 2009 represented about 28% of Cinram's total consolidated revenues.

Cinram is a Toronto-based provider of pre-recorded multimedia products and related logistics services.

Dole price talk surfaces

Switching to new deal happenings, Dole Food held a bank meeting at noon ET on Tuesday to launch its proposed $1.2 billion credit facility, and in connection with the launch, price talk was announced, according to a market source.

The $850 million seven-year term loan was presented with talk of Libor plus 325 bps to 350 bps with a 1.75% Libor floor and an original issue discount of 99, the source said.

And, the $350 million four-year ABL revolver was presented with talk of Libor plus 400 bps with no Libor floor, the source added.

Deutsche Bank, Bank of America and Wells Fargo are the lead banks on the deal that will be used to refinance existing term loan and ABL revolver debt, and the remaining $70 million of senior notes that mature in 2011.

The refinancing is expected to reduce the company's interest expense and extend maturities. It will put Dole's nearest debt maturity in 2013.

Dole reveals full-year numbers

Also on Tuesday, Dole announced 2009 fiscal year results, with operating income being $352 million, compared to $275 million in the previous year.

Income from continuing operations before income taxes was $108 million for the year, up from $99 million in fiscal 2008.

Revenues for the fiscal year, which ended on Jan. 2, were $6.779 billion, down from $7.62 billion in the prior year.

The Westlake Village, Calif.-based fruit and vegetables company said that the decrease in revenues was primarily due to the fourth quarter 2008 sale of its JP Fresh and Dole France ripening and distribution subsidiaries as well as the benefit of a 53-week year in 2008 compared to a 52-week year in 2009. Also, lower sales in the remaining European ripening and distribution business, and in the fresh vegetables and packaged foods segments impacted revenues.

Dole EBITDA improves

In addition, Dole said that its 2009 adjusted EBITDA was $417 million, an improvement from adjusted EBITDA of $410 million in 2008.

The company's leverage ratio for 2009 was 3.5 times, compared to 5.2 times for the previous year, and year-end net debt was $1.478 billion, compared to $2.113 billion at the end of 2008.

"Dole had another outstanding year in 2009. We continued to build on the strong operating performance achieved in 2008, generating outstanding cash flow, which allowed us to pay down a significant amount of debt. In addition, we had cash proceeds from asset sales in 2009 totaling approximately $185 million, bringing the two year total for asset sales to over $400 million - while growing EBITDA," said David A. DeLorenzo, president and chief executive officer, in a news release.

"During October 2009, we successfully completed an IPO of Dole common stock, raising $330 million of net proceeds to Dole, all of which was used to pay down debt and its related costs. In addition, in September 2009 we successfully refinanced $363 million of our 7.25% senior notes due 2010.

"We are optimistic as we look forward to improving earnings and further reductions in costs and debt in 2010," DeLorenzo added.

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