Momentive up with earnings; Realogy rises on new financing; Dana gains; Delta firms spread

By Sara Rosenberg

New York, Sept. 24 - Momentive Performance Materials Inc.'s bank debt headed higher on Thursday following the company's release of positive preliminary quarterly numbers and announcement of a loan waiver.

In more trading happenings, Realogy Corp.'s bank debt moved upward on news of a second-lien deal that will be used to repay some existing loan borrowings, Dana Holding Corp.'s term loan B was better on the back of the company upsizing its common stock offering and Rite Aid Corp.'s term loans were down with earnings.

Over in the primary market, Delta Air Lines Inc. set the spread on its downsized term loan at the loan end of price talk and is now getting ready to give out allocations on the transaction sometime next week.

Momentive strengthens

Momentive Perfomance's term loan B and letter-of-credit facility were both better during the trading session as the company released preliminary results for the third quarter and announced that it received a waiver under its credit facility, according to traders.

The term loan B was quoted by one trader at 85 bid, 86 offered, up from 83 bid, 84 offered, and by a second trader at 86 bid, 87 offered, up from 83½ bid, 85½ offered.

In addition, the company's letter-of-credit facility was quoted by the second trader at 78 bid, 80 offered, up from 75 bid, 77 offered.

For the third quarter ended Sept. 27, the company expects to post net sales of about $550 million to $570 million, compared to net sales last year of about $699.9 million.

GAAP operating income for the quarter is expected to be about $35 million to $45 million, compared to about $17.6 million in the 2008 third quarter.

And, adjusted EBITDA for the quarter is expected to be about $84 million to $94 million, compared to about $115.9 million in the prior year.

Momentive debt levels flat

Momentive Performance also estimates that its total debt, net of cash and cash equivalents, will be between $2.83 billion and $2.86 billion at the end of the quarter, essentially unchanged from $2.86 billion as of June 28.

"Demand has continued to steadily improve on a quarterly basis since the beginning of the year. The effects of the recession, however, have continued to impact year-over-year comparisons," said Jonathan Rich, president and chief executive officer, in a news release.

"While visibility to demand remains limited, we do expect to see continued benefits in the fourth quarter from the cost actions that we've taken to date," Rich continued.

Momentive gets waiver

Furthermore on Thursday, Momentive Performance revealed that it entered into an amendment to its credit facility, under which revolver lenders agreed to waive compliance with the senior secured leverage ratio for the quarters ended Sept. 27 and Dec. 31.

In connection with the amendment, pricing on the revolver was increased by 125 basis points.

Lenders were paid a 25 bps consent fee.

"Although business conditions have steadily improved since the first quarter of 2009, we entered into the waiver and amendment as a precautionary measure to remove any uncertainty regarding compliance with the financial maintenance covenant in the credit agreement. As a result of the waiver and the actions we've taken to reduce our cost structure, the company is well positioned to comply with the maintenance covenant as the economy recovers," Rich added in the release.

Momentive is an Albany, N.Y.-based specialty materials company, providing high-technology materials products to the silicones, quartz and ceramics markets.

Realogy rallies

Realogy's bank debt posted noticeable gains on Thursday after the company revealed plans for a new $325 million incremental second-lien term loan that will be used to refinance a portion of its existing bank debt, according to traders.

The strip of institutional bank debt was quoted by one trader at 86¾ bid, 87¾ offered, up from 84 bid, 85 offered and by a second trader at 85 bid, 87 offered.

And, the company's delayed-draw loan was quoted by the first trader at 86½ bid, 87½ offered, up from 84 bid, 85 offered.

The new second-lien term loan is being led by JPMorgan and the books on the deal were scheduled to close on Thursday afternoon.

Realogy planning debt swap

If Realogy's second-lien loan or an alternate second-lien transaction is successfully completed, Icahn Partners LP has agreed to exchange about 70% of the company's $311 million 11%/11.75% senior toggle notes due 2014 held by it for $150 million of new second-lien term loan debt.

The $150 million second-lien loan would be in addition to the $325 million second-lien loan and would carry the same terms.

Furthermore, concurrently with the exchange, Icahn has agreed to sell the balance of the senior toggle notes held by it for cash to Apollo Management LP and participate as a lender in the $325 million second-lien loan.

Realogy has also recently been engaged in confidential discussions with certain institutional holders of its 10.5% senior notes due 2014, 11%/11.75% senior toggle notes due 2014 and 12.375% senior subordinated notes due 2015 regarding a potential exchange of the notes for equity and new debt.

Based upon the company's current financial forecast and additional equity available from its sponsor through Dec. 31, and the ability to repay bank borrowings with the proceeds of additional second-lien or other debt, the company expects to remain in compliance with the senior secured leverage ratio under its credit facility at Sept. 30.

Realogy updates guidance

In addition on Thursday, Realogy also updated its expected financial results for the third quarter ending Sept. 30.

The company now expects revenue for the third quarter in the range of about $1.14 billion to $1.17 billion.

Net loss for the quarter is expected in the range of about $20 million to $25 million.

And, EBITDA for the quarter is expected in the range of about $165 million to $180 million after estimated expenses of $15 million to $20 million for restructuring and other items.

Realogy is a Parsippany, N.J.-based provider of real estate and relocation services.

Dana moves up

Dana's term loan B saw positive momentum in trading as investors are now expecting a larger paydown due to the company's decision to increase its stock offering, according to traders.

The term loan B was quoted by one trader at 89 bid, 90 offered, up from 85½ bid, 89½ offered, and by a second trader at 89 bid, 90 offered, up from 87¼ bid, 88¼ offered.

On Wednesday night, Dana announced that upsized its common stock offering to 34 million shares from 27 million shares. The shares priced at $6.75 per share.

As required under the company's credit facility, 50% of the proceeds from the stock sale will be used to repay term loan borrowings.

Remaining proceeds will be used for general corporate purposes, including flexibility for future expansion and restructuring of operations.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

Rite Aid slides

Rite Aid's term loans weakened on Thursday after the company released second-quarter results, according to a trader.

The old term loan was quoted at 88 bid, 89 offered, down a quarter of a point on the day, and the new term loan was quoted at 94¾ bid, 95¾ offered, down a half a point on the day, the trader said.

For the second quarter ended Aug. 29, Rite Aid reported a net loss of $116 million, or $.14 per diluted share, compared to a net loss of $222 million, or $0.27 per diluted share.

Revenues for the quarter were $6.3 billion versus revenues of $6.5 billion in the prior-year second quarter.

Adjusted EBITDA for the quarter was $216.5 million, or 3.4% of revenues, compared to $219.9 million, or 3.4% of revenues, last year.

And, liquidity remained strong with $822.3 million of availability on the company's credit and accounts receivable facilities at quarter end.

Rite Aid lowers guidance

Rite Aid lowered its fiscal 2010 guidance as a result of expectations for a continued weak economy with high unemployment negatively impacting front end sales along with increased pressure on pharmacy gross margins.

Total sales are now expected to be between $25.7 billion and $26.2 billion in fiscal 2010, with same store sales ranging from a decrease of 1% to an increase of 1% over fiscal 2009.

Adjusted EBITDA is now expected to be between $900 million and $1 billion.

And, net loss for the fiscal year is now expected to be between $390 million and $615 million or a loss per diluted share of $0.48 to $0.74.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Delta finalizes pricing

Moving to new deal happenings, Delta Air Lines nailed down pricing on its $250 million four-year term loan at Libor plus 675 basis points, the low end of the Libor plus 675 bps to 700 bps talk, according to a market source.

As was previously reported, the Atlanta-based airline company's loan has a 2% Libor floor and was sold to investors at an original issue discount of 98.

During syndication, the loan was reduced from $500 million as the company's first-lien bond offering was increased to $750 million from $500 million. The 9½% first-lien notes priced on Wednesday at 98.563 to yield 9 7/8%.

The company also sold $600 million of 11¾% senior second-lien notes at 95.288 to yield 13%. This second-lien offering was added to the deal earlier in the week and was initially sized at $500 million.

Proceeds from the new credit facility, along with $1.35 billion in bonds, will be used to repay borrowings under Northwest Airlines Inc.'s senior corporate credit facility and for general corporate purposes.

Citigroup and Deutsche Bank are the joint lead arrangers and bookrunners on the $750 million credit facility (Ba2), which also includes a $500 million 31/2-year revolver that is not currently being marketed.

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