General Motors slips lower; Investors remain focused on BWIC; U.S. Silica sees some orders

By Sara Rosenberg

New York, Oct. 27 - General Motors Corp.'s term loan weakened during Monday's light trading session, and even though Moody's Investors Service downgraded the company's ratings, the move was more likely a result of overall softness in the cash market.

Also on the trading front, LCDX 10 headed down probably in sympathy with the equities market.

Meanwhile, over in the primary, U.S. Silica Co.'s term loan A has received some interest ahead of its late week commitment deadline and more indications from investors are expected to come in over the next couple of days.

General Motors inches down

General Motors' term loan lost some ground during market hours, and while a downgrade from Moody's didn't help, the debt was probably just off with the rest of the market, according to a trader.

The term loan was quoted at 46½ bid, 48½ offered, down about a point on the day, the trader said.

"Loan market traded off by about a point on the day, so it was probably off with that," the trader remarked. "Probably not because of downgrade. Not big news. No real surprise to anybody."

Moody's cuts General Motors on sector problems

On Monday, Moody's said that it downgraded General Motors' corporate family rating to Caa2 from Caa1, and the rating outlook is negative.

Moody's said that the downgrade reflects the expectation that the pace and severity of erosion in the U.S. automotive sector will severely outpace the company's ability to respond effectively, and that even with the benefit of the U.S. Government's $25 billion guaranteed loan program to assist auto companies in developing new fuel efficient vehicles, General Motors' liquidity profile will continue to erode into 2009.

"The Caa2 long-term and SGL-4 liquidity ratings reflect the risk that despite all of GM's business restructuring and liquidity raising efforts to date, the magnitude of cash outflows due to ongoing operating losses, debt repayments and other uses will consume the company's available cash during 2009," said Bruce Clark, senior vice president with Moody's, in the rating release.

Moody's also said that the rating downgrade considers that absent significant external financial and/or business assistance, General Motors could face a cash shortfall by mid 2009.

General Motors is a Detroit-based automotive manufacturer.

BWIC still in spotlight

The $969 million BWIC, for which bids are due on Tuesday, continued to be at the forefront of a lot of peoples' minds on Monday, and may explain why the trading session was so slow, according to a trader.

"People waiting to see what happens with the BWIC before doing anything. Think that might be part of why there's light volume," the trader said.

As was previously reported, the BWIC is comprised of somewhere around 135 names, and includes names like Delta Air Lines Inc., Northwest Airlines Corp., UAL Corp., Swift Transportation Co. Inc., General Motors and Calpine Corp., just to name a few.

LCDX heads down

LCDX 10 saw levels move lower on Monday, most likely as a result of stocks being down, according to a trader.

The index was quoted around 83.75 bid, 84.5 offered, down from Friday's levels of around 84 bid, 84.75 offered, the trader said.

Nasdaq closed down 46.13 points, or 2.97%, Dow Jones Industrial Average closed down 203.18 points, or 2.42%, S&P 500 closed down 27.85 points, or 3.18%, and NYSE closed down 231.01 points, or 4.26%.

U.S. Silica syndication progressing

Switching to new deal happenings, U.S. Silica's $145 million seven-year term loan A "is coming along pretty well" since launching on Oct. 16 and a better feel for investors' attitudes towards the transaction is anticipated to emerge over the next few days, according to a market source.

The deal does currently have some commitments in the book, the source said.

In addition, there are still a number of accounts working on the loan and the expectation is that more feedback from investors will come in over the course of this week, the source added.

The commitment deadline for the deal is this Thursday.

Despite being called a term loan A, the deal is being marketed to a combination of banks and institutional investors.

There was no pre-marketing stage for this term loan and, currently, the company does not have an existing lender base. The company did get a credit facility about a year and a half ago, but that debt has already been taken out.

U.S. Silica has an existing $35 million ABL revolver that is going to remain in place following completion of the new term loan.

U.S. Silica proposed loan terms

As was previously reported, U.S. Silica's term loan A is being talked at Libor plus 550 basis points with a 3.25% Libor floor and an original issue discount of 97.

Amortization on the term loan is 2% in the first two years, 11% in year three, 12% in year four, 15% in years five and six, and the remainder in year seven.

Covenants include total leverage, minimum interest coverage and minimum fixed-charge coverage.

BNP Paribas is the lead bank on the deal.

Proceeds will be used to help fund the leveraged buyout of the company by Golden Gate Capital and Preferred Unlimited.

Total leverage will be in the 4½ times range and senior leverage will be 3.0 times.

U.S. Silica is a Berkeley Springs, W.Va.-based producer of ground and unground silica sand, kaolin clay, aplite and related industrial minerals.

Manitowoc closes

Manitowoc Co. Inc. completed its acquisition of Enodis plc for $2.7 billion, according to a news release.

To help fund the transaction, Manitowoc got a new $2.925 billion credit facility (Ba2/BB+), consisting of a $1.2 billion six-year term loan B, a $400 million five-year revolver, a $1.025 billion five-year term loan A and a $300 million 18-month term loan X.

The term loan B is priced at Libor plus 350 bps with a step down to Libor plus 325 bps when leverage is below 2.0 times, there is a 3% Libor floor, and the debt was sold to investors at an original issue discount of 98.

The revolver, term loan A and term loan X are all priced at Libor plus 325 bps, in line with initial terms.

During syndication, the term loan B was downsized from $1.325 billion, while the term loan A was upsized from $900 million, and the pricing step-down was added to the term loan B.

JPMorgan, Deutsche Bank, Morgan Stanley and BNP Paribas acted as the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent, Deutsche and Morgan Stanley the syndication agents, and BNP the documentation agent.

Manitowoc is a Manitowoc, Wis.-based provider of lifting equipment for the construction industry, manufacturer of cold-side equipment for the foodservice industry, and provider of shipbuilding, ship repair and conversion services. Enodis is a Tampa, Fla.-based food and beverage equipment manufacturer.

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