Neiman down with numbers; Freescale up; Herbst unfazed by restructuring; LCDX, cash tick higher

By Sara Rosenberg

New York, March 11 - Neiman Marcus Inc.'s term loan was quoted lower on Wednesday in light activity following the company's release of earnings results that showed a net loss as a result of write-downs.

Also, Freescale Semiconductor Inc.'s term loan was a bit stronger as an update was released on the company's exchange offer, although the movement probably had more to do with the rest of the market being up.

In more secondary happenings, Herbst Gaming Inc.'s term loan was pretty much unaffected by the company's newly announced restructuring plan as lenders were already expecting the news, and the LCDX 10 index was better on the day.

Neiman slides on earnings

Neiman Marcus' term loan headed lower during the trading session after the company released results for the quarter ended Jan. 31, according to a market source.

The term loan was quoted at 57 bid, 59 offered, down from Tuesday's levels of 59 bid, 61 offered, the source said.

For the second quarter of fiscal year 2009, the company reported a net loss of $509.2 million, compared to net earnings of $44.3 million in the prior year. The loss includes non-cash impairment charges of $560.1 million.

Total revenues for the quarter were $1.08 billion, compared to $1.37 billion in the second quarter of fiscal 2008.

And, adjusted EBIDTA for the quarter was $24.6 million, compared to adjusted EBITDA of $187.3 million in the previous year.

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

Freescale moves higher

Freescale Semiconductor's term loan was a touch stronger as the company provided an update on its exchange offer, with the positive momentum most likely caused by the strength in the cash market in general, according to a trader.

The term loan was quoted at 39 bid, 41 offered, up from 38½ bid, 40½ offered, the trader said.

Freescale said that as of midnight ET on Tuesday, the company had received commitments with respect to about $3.03 billion aggregate principal amount of the existing notes, meaning it would incur about $897 million of new incremental term loan debt.

As of the last update in late February, the company had received commitments with respect to about $2.95 billion aggregate principal amount of the existing notes, for a roughly $703 million incremental term loan.

In addition, the company extended the termination date of its note invitation to eligible holders of its 9.125%/9.875% senior PIK-election notes due 2014 while waiving the $250 million limitation.

Freescale still trying to raise $1 billion

With the extension of the exchange offer for the PIK toggle notes and the removal of the maximum acceptance amount limitation, Freescale is hoping that it can still get enough notes to exchange into a $1 billion incremental term loan - as opposed to leaving it at $897 million.

The senior PIK toggle notes invitation has been pushed out until March 24.

Results for the exchange of the company's senior floating-rate notes due 2014, 8.875% senior fixed-rate notes due 2014 and 10.125% senior subordinated notes due 2016 are now final and the exchange offer invitation has been terminated.

The incremental term loan due Dec. 15, 2014 will carry pricing of 12.5%, and will be guaranteed by the same guarantors under the company's senior secured credit facility.

The company's existing credit facility lenders were invited to participate in the new loan as well, but declined, which is not surprising given that the incremental term loan is dilutive to bank holders.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

Herbst holds steady

Herbst Gaming's term loan was pretty flat on the day despite news that the company reached an agreement with lenders holding about 68% of its loans on a financial restructuring plan, according to a trader.

The term loan was quoted at 19 bid, 21 offered, in line with previous levels, the trader said, explaining that people already had an understanding on what was going to happen with the company before the announcement came out.

The proposed restructuring plan will be done through a pre-arranged Chapter 11 filing, which is expected to take place shortly.

"All of our casinos and the route business are generating positive EBITDA, even in the current challenging economic environment," said Troy Herbst, chief executive officer, in a news release. "Our problem is a balance sheet issue; we have more debt than our operations can support. This agreement with our bank lenders is designed to resolve our balance sheet problem by restructuring our debt."

Herbst lenders to get debt and equity

Under the restructuring plan, Herbst Gaming's casino and slot route business will be separated into two holding companies.

Outstanding obligations under the company's senior credit facility will be converted into debt and equity of the reorganized companies, with bank lenders receiving 100% of the new equity of the reorganized casino company and the reorganized casino company owning 10% of the new equity in the new slot route business.

Furthermore, the plan provides for termination of all outstanding obligations under the company's 8.125% senior subordinated notes and 7% senior subordinated notes, and the cancellation of all existing equity in the company.

Herbst Gaming is a Las Vegas-based slot and casino company.

LCDX, cash gain ground

The LCDX 10 index and the cash market in general were stronger on the day as stocks showed a minimal uptick, according to traders.

The index was quoted at 73.30 bid, 73.70 offered, up from around 72.65 bid, 72.90 offered on Tuesday, traders said.

And, cash was described by traders as probably being better by about a quarter of a point across the board.

Meanwhile, Nasdaq closed up 13.36 points, or 0.98%, Dow Jones Industrial Average closed up 3.91 points, or 0.06%, S&P 500 closed up 1.76 points, or 0.24%, and NYSE closed up 6.00 points, or 0.13%.

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