Delta, Ventiv, MD Beauty break for trading; Delphi stronger on heightened bankruptcy fears

By Sara Rosenberg

New York, Oct. 7 - Delta Air Lines Inc. allocated its $1.9 billion debtor-in-possession financing facility first thing Friday morning, with the term loan A and the term loan C closing out the day in the 102s, and the term loan B closing out the day in the 103s. Also breaking for trading was Ventiv Health Inc. in the 101 context and MD Beauty Inc.'s first- and second-lien add-ons.

In other secondary doings, Delphi Corp.'s revolving credit facility inched its way to stronger levels as investors are leaning toward the likelihood of a bankruptcy filing in the company's near future, especially in the wake of a recent rating downgrade by Standard & Poor's.

Delta's DIP opened for trading Friday morning with the term loan quoted at 102 bid, 102½ offered, the term loan B quoted at 102 bid, 102½ offered and the term loan C quoted at 102 1/8 bid, 102 5/8 offered, according to a fund manager.

Shortly after the break, however, levels changed a little, with the term loan A quoted at 102 1/8 bid, 102 5/8 offered, the term loan B quoted at 103¼ bid, 103¾ offered and the term loan C quoted at 102 1/8 bid, 102 5/8 offered - which is where all three tranches basically ended the shortened session, the fund manager added.

All of the paper was trading so high because each tranche has a pretty huge coupon and being that it's a DIP, it's got "super priority security," the fund manager explained.

The $600 million term loan A is priced with an interest rate of Libor plus 450 basis points. Originally, price talk on the tranche was Libor plus 500 basis points, but it was reverse flexed during syndication.

The $700 million term loan B is priced with an interest rate of Libor plus 650 basis points. Originally, the tranche was sized at $600 million and price talk was Libor plus 700 basis points, but it was upsized and reverse flexed during syndication.

Lastly, the $600 million term loan C is priced with an interest rate of Libor plus 900 basis points. Originally, the tranche was sized at $500 million, but it was upsized during syndication.

General Electric Capital Corp. acted as the lead arranger and bookrunner on the deal, and Morgan Stanley acted as a co-lead on the term loan C.

On Thursday, Delta announced that it obtained final court approval for the $1.9 billion 30-month DIP, up from an original size of $1.7 billion. The court also granted final authority for Delta to use $350 million of secured post-petition financing that American Express has agreed to provide.

The Atlanta-based airline's DIP will refinance $630 million of financing provided by GE Commercial Finance and $500 million of financing provided by American Express in November 2004. The company will apply proceeds from the DIP to repay $50 million of the American Express facility, reducing the amount owed under that facility to $300 million.

The DIP is secured by a super-priority lien on all unencumbered assets of the company, including unrestricted cash, certain aircraft, real estate, spare parts, ground service equipment, tooling, simulators, routes, slots and stocks of subsidiaries.

The $350 million of secured financing from American Express will be secured by liens junior to the DIP facility.

Ventiv tops 101

Ventiv Health allocated its credit facility Friday morning, with the term loan freeing up for trading in the 101 bid, 101½ offered context, according to a trader.

The $175 million six-year term loan B is priced with an interest rate of Libor plus 150 basis points. The tranche was originally launched with price talk of Libor plus 175 basis points but was reverse flexed during syndication.

Ventiv's $225 million senior secured credit facility (Ba3/BB-) also contains a $50 million five-year revolver.

UBS and Bank of America acted as the joint lead arrangers on the deal, with UBS also acting as bookrunner and Bank of America acting as syndication agent.

Proceeds were used to fund the recently completed acquisition of inChord Communications Inc. for $185 million in cash and stock, plus closing adjustments and earn-out payments for exceeding specified financial targets.

Ventiv is a Somerset, N.J., provider of outsourced clinical, sales, marketing and compliance solutions for the pharmaceutical, biotechnology and life sciences industries. inChord is a Westerville, Ohio, health care marketing and communications company.

MD Beauty breaks

MD Beauty's first- and second-lien term loan tack-ons allocated and freed up for trading Friday morning, according to a market source. However, trading levels on the debt were elusive, with the only information seen by one investor being a 101¾ offer on the first-lien loan.

The $96 million first-lien term loan add-on (B1/B) is priced with an interest rate of Libor plus 300 basis points. Originally, the add-on was sized at $86 million with pricing of Libor plus 325 basis points but was upsized and reverse flexed during syndication. With the decision to reverse flex the add-on, the syndicate also repriced the existing first-lien term loan debt down from Libor plus 325 basis points - a move that was not originally part of the package.

The $91.5 million second-lien term loan add-on (B3/CCC+) is priced with an interest rate of Libor plus 700 basis points. The existing second-lien debt had been priced at Libor plus 650 basis points but was -as was always planned - repriced to the 700 basis point mark in connection with this add-on deal.

BNP Paribas is the lead bank on the deal that is being used to fund a dividend payment.

MD Beauty is a San Francisco-based personal care company that is a portfolio company of JH Partners and Berkshire Partners.

Delphi trades up

Delphi's revolver ticked higher as bankruptcy is starting to seem more and more likely to investors who are banking on being taken out at par or being rolled into some sort of debtor-in-possession financing facility, according to a trader.

The revolver was quoted at 98½ bid, 98¾ offered on Friday, compared to Thursday's closing levels of 98 1/8 bid, 98 5/8 offered, the trader said. On Thursday, a different trader said the revolver had been trading right around the 98 level.

People have been starting to lean toward the likelihood of a Chapter 11 filing as the Oct. 17 deadline that was previously given by Delphi looms closer and closer and no agreement has been reached with General Motors Corp. and the United Auto Workers union.

Most recently pushing lenders to the Chapter 11 frame of mind was S&P's late Thursday downgrade of the company's corporate credit rating to CCC- from CCC+ because of increased bankruptcy concerns.

"For the past several months, Delphi has been engaged in discussions with GM, its largest customer and former parent, and with the UAW, its largest union, to restructure its unprofitable U.S. operations," said S&P credit analyst Martin King, in the release.

"While we believe all three parties are motivated to complete a deal outside of bankruptcy court, the time frame for doing so has become very limited. Delphi has indicated that it may place its U.S. operations in Chapter 11 bankruptcy if a deal is not reached by Oct. 17, 2005, when changes to U.S. bankruptcy law will put greater constraints on companies that file for this type of protection," King added in the release.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

Kodak shuts books, readies allocations

Recommitments were due from lenders on Eastman Kodak Co.'s recently tweaked $2.7 billion credit facility (Ba2/BB-) on Friday and, with the syndication process coming to a close, investors are expecting allocations early next week, according to a market source.

Kodak recently made some changes to the facility, shifting $200 million out of its revolver and into its funded term loan, since the revolver was moving along at a bit of a slower pace in terms of syndication and the term loan had "quite a few orders," the source explained.

The revolver is now sized at $1 billion, compared to an original size of $1.2 billion. As was disclosed at the end of September, pricing on the revolver is now at Libor plus 200 basis points compared to original price talk of Libor plus 150 basis points, because it moved higher on the original pricing grid after S&P downgraded the company's credit facility by one notch to BB- from BB.

The funded term loan is now sized at $1.2 billion, compared to an original size of $1 billion, while the delayed-draw term loan size remained at $500 million. Like the revolver, pricing on the term loan tranches stepped up based on a pricing grid that was always included in the deal following the S&P downgrade. However, unlike the revolver, spreads on the term loans are set at Libor plus 225 basis points, compared to original price talk of Libor plus 175 basis points.

The delayed-draw term loan is available until June 2006.

The term loans were offered to investors at par. Upfront fees on the revolver were 100 basis points for $100 million commitments, 75 basis points for $75 million commitments, 50 basis points for $50 million commitments and 37.5 basis points for $25 million commitments.

Citigroup Global Markets Inc. is the lead arranger on the deal.

Borrowings under the revolver, which will replace the company's existing $1.225 billion five-year revolver expiring in July 2006, will be available for general corporate purposes.

Term loan proceeds will be used to repay existing company debt primarily arising out of the acquisition of Creo, which was completed on June 15.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.