Chrysler Auto postponed again; LCDX, cash continue to slide on market worries

By Sara Rosenberg

New York, Nov. 20 - Chrysler Corp. LLC (Chrysler Auto) opted to pull its first-lien term loan from market, making this the second time that the deal has been postponed as a result of market conditions.

As for the secondary, the overall cash market and LCDX were once again lower as credit concerns continue to plague investors and the loan pipeline remains a source of nervousness, which wasn't helped by Chrysler Auto's news.

Chrysler Auto has pulled its $7.5 billion first-lien term loan (B1/BB-/BB+) from market due to primary conditions and, currently, there is no indication as to when the deal may return, according to a market source.

Of the total term loan amount, approximately $4 billion was originally planned to be syndicated when the loan was launched on Nov. 7, and then that number was changed to approximately $2 billion last week because of investor reception.

The first-lien term loan was being talked at Libor plus 400 basis points, with call protection of non-callable for one year, then at 104 in year two, 102 in year three and 101 in year four.

At launch, investors were told the original issue discount on the paper would be in the 97 to 97½ range. The discount was increased to the 95½ to 96 area last week in the hopes of gaining some momentum.

This is the second time that the Chrysler Auto deal has been postponed. In late June, the deal was launched to investors with a structure of one $10 billion tranche that was talked at Libor plus 325 bps, with call protection of non-callable for one year then at 101 in year two.

During that first syndication attempt, price talk had been flexed up to Libor plus 375 bps before the deal was pulled in July because of market conditions.

Proceeds from the already funded term loan were used to help fund the acquisition of a majority interest in the company by Cerberus Capital Management, LP from DaimlerChrysler AG.

When the loan funded in August, it was documented as a $5 billion first-out term loan (Ba3/BB-) and a $5 billion second-out term loan (B3/B).

Since funding this summer, $2.5 billion of the original $10 billion amount had been repaid using restricted cash on the balance sheet, which is why on its return to market in November, the total size of the deal was set at $7.5 billion.

JPMorgan, Goldman Sachs, Citigroup, Bear Stearns and Morgan Stanley are the bookrunners on the loan, with JPMorgan, Goldman and Citigroup the joint lead arrangers.

Chrysler Auto also got a $2 billion delayed-draw for 12 months, seven-year, second-lien term loan that was funded by Cerberus and DaimlerChrysler - who took down $500 million and $1.5 billion, respectively - and the agreement was made that this loan would not come back for broad syndication for at least a year from close.

Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

Cash, LCDX fall progresses

Switching to trading news, the cash market and LCDX 9 both were weaker on Tuesday, reflecting the recent skittishness sparked by talks of Citigroup's upcoming potential write-offs as well as the still relatively large loan pipeline, according to traders.

In cash, everything was down by anywhere from an eighth to three-eighths of a point, including recent new issue names like Alltel Communications Inc., First Data Corp. and Texas Competitive Electric Holdings Co. LLC (TXU).

Alltel, a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 end the day at 95¼ bid, 95¾ offered, down from 95 3/8 bid, 95 5/8 offered, traders said.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services for businesses, saw its term loan B-1 end the day at 94 3/8 bid, 94 7/8 offered, down from 94½ bid, 95 offered, and its term loan B-2 end the day at 94 5/8 bid, 95 1/8 offered, down from 94¾ bid, 95¼ offered, traders continued.

Texas Competitive, a Dallas-based energy company, saw its term loan B-2 close at 97½ bid, 98 offered, down from 97¾ bid, 98 1/8 offered, and its term loan B-3 close at 97 5/8 bid, 98 1/8 offered, down from 97¾ plus bid, 98 1/8 plus offered, traders remarked.

As for LCDX, traders said that levels went out around 95.40 bid, 95.50 offered, down from 95.65 bid, 95.80 offered.

"There's not much confidence in the market at this point. Citi write-offs. People still concerned about the pipeline. [It's] preventing a maintained rally. Chrysler pulling their deal kind of reiterated the same point," one trader added.

The Citigroup write-offs refers to speculation that emerged Monday morning that the bank may have to write off a total of $15 billion in collateralized debt obligations over the fourth quarter of 2007 and the first quarter of 2008.

ReAble closes

ReAble Therapeutics, Inc. completed its acquisition of DJO Inc. for $50.25 in cash per share, according to a news release. The transaction was valued at approximately $1.5 billion.

To help fund the acquisition, ReAble got a new $1.155 billion senior secured credit facility (Ba3/BB-) consisting of a $100 million six-year revolver priced at Libor plus 300 bps, with a 50 bps commitment fee, and a $1.055 billion 61/2-year term loan B priced at Libor plus 300 bps that was sold at an original issue discount of 99.

Credit Suisse and Bank of America acted as the lead banks on the deal.

Other acquisition financing came from $575 million of senior notes and equity from the Blackstone Group, which is the controlling shareholder of ReAble.

Following the closing, ReAble is being renamed DJO Inc. and will relocate its headquarters to Vista, Calif., from Austin, Texas.

ReAble is a medical device company focused on rehabilitation, pain management, physical therapy and orthopedics. DJO is a provider of products and services that promote musculoskeletal and vascular health.

MSCI closes

MSCI Inc. closed on its $500 million senior secured credit facility (Ba2/BB+), according to a company news release.

The facility consists of a $75 million revolver priced at Libor plus 250 bps, a $200 million term loan A priced at Libor plus 250 bps and a $225 million term loan B priced at Libor plus 300 bps.

The term loan B was sold to investors with an original issue discount of 991/2.

During syndication, the revolver was upsized from $50 million, the term loan A was upsized from $150 million and the term loan B was downsized from $250 million.

In addition, during syndication, the original issue discount on the term loan B was tightened from 99.

Morgan Stanley and Bank of America acted as the lead banks on the deal.

The facility was done in connection with an initial public offering of common stock.

Proceeds were used to repay intercompany debt owed to Morgan Stanley.

MSCI is a New York-based provider of investment decision support tools to investment institutions.

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