Movie Gallery rises; LCDX tracks equities higher; GXS outlines expected spreads

By Sara Rosenberg

New York, Aug. 29 - Movie Gallery Inc.'s first-lien term loan continued to gain some ground on Wednesday, and LCDX moved to stronger levels as equities were better.

In other news, GXS Worldwide Inc. came out with guidance on where it expects pricing on its first- and second-lien bank debt to firm up, as well as where original issue discounts are anticipated to shake out.

Movie Gallery's first-lien term loan was higher in Wednesday's quiet trading session on no credit-specific news, according to a trader.

The first-lien term loan closed the day at 84 bid, 85½ offered, up half a point from Tuesday's levels of 83½ bid, 85 offered, the trader said.

At the close last Friday, the first-lien term loan was being quoted at 82½ bid, 83½ offered, meaning that gains over the course of this week total a point and a half.

With the slow rise all week, some sources have pointed to the company's recent extension of its loan forbearance agreement as the impetus and others said that there's probably just some bargain shopping going on.

On Tuesday morning, Movie Gallery revealed that it once again extended the forbearance agreement it has with its first-lien credit facility lenders. Under the extension, the lenders will forbear until Sept. 30 from exercising rights and remedies arising from existing defaults.

The original forbearance agreement was set to expire on Aug. 14 and was later pushed off to Aug. 27.

Movie Gallery is a Dothan, Ala.-based video rental company.

LCDX trades up

In more trading news, LCDX headed higher during market hours in sympathy with the stock market, according to traders.

The index went out around 94.80 bid, 95.10 offered, up from around 94.50 bid, 94.75 offered on Tuesday, one trader said.

A second trader had LCDX quoted a little tighter at 94.85 bid, 95.05 offered.

"It's definitely tracking equities," the first trader added.

Stocks on Wednesday closed up, with Nasdaq gaining 62.52 points, or 2.50%, Dow Jones Industrial Average gaining 247.44 points, or 1.90%, S&P 500 gaining 31.40 points, or 2.19%, and NYSE gaining 219.43 points, or 2.36%.

GXS expected pricing, discounts

GXS Worldwide is currently anticipating firming pricing on its bank debt at levels that are 75 basis points higher than original talk and is expecting original issue discounts on the first- and second-lien term loans of 99, according to a market source.

The $50 million revolver (Ba3/B+) and the $378.5 million first-lien term loan (Ba3/B+) are both expected to firm up at Libor plus 400 bps, up from original guidance of Libor plus 325 bps, the source said.

The $131.5 million second-lien term loan (Caa1/B-) is expected to firm at Libor plus 750 bps, up from original talk of Libor plus 675 bps, the source added.

The second-lien term loan carries call protection of 102 in year one and 101 in year two.

GE Capital and Societe Generale are the lead banks on the $560 million senior secured deal.

Proceeds from the facility, along with a $55 million unsecured holding company payment-in-kind note, will be used to refinance existing debt.

GXS is a Gaithersburg, Md., business-to-business e-commerce services provider.

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