Navistar softens as company passed over for contracts; Sabre Industries trades above OID

By Sara Rosenberg

New York, Aug. 24 - Navistar Inc.'s covenant-light term loan B headed lower in trading on Friday on the back of news reports that it missed out on contracts with the government to develop joint light tactical vehicles.

Also in trading, Sabre Industries Inc.'s term loan, which recently saw pricing flex higher, saw levels hold steady in its second day in the market.

Navistar retreats

Navistar's $1 billion five-year covenant-light term loan B (Ba2/B+/BB-) dropped to par 3/8 bid, par 5/8 offered, from par 7/8 bid, 101 1/8 offered, on reports of failure to win government contracts for joint light tactical vehicles, a trader said.

The trader explained that the company's equity and bonds have under pressures since the news first emerged a day or two ago, and now the loan is just following suit.

The U.S. Department of Defense was looking for companies to develop lightweight vehicles that offer greater protection, mobility and transportability to replace many of the U.S. military's older Humvees, and Oshkosh Corp., AM General LLC and Lockheed Martin Corp. were contracted for the job, while Navistar was not, according to news reports.

Under the contracts, Oshkosh will be delivering 22 designed and manufactured prototypes called L-ATV, AM General will produce and deliver 22 prototypes of its Blast Resistant Vehicle - Off road for government testing, and Lockheed Martin will deliver 22 of its JLTV-UTL and JLTV-GP vehicles.

Navistar loan details

Navistar's term loan, which closed on Aug. 17 and was used to repay ABL credit facility borrowings and for general corporate purposes, broke for trading on Aug. 16 at par ¾ bid, 101¼ offered.

Pricing on the loan is Libor plus 550 basis points with a 1.5% Libor floor, and it was sold at a discount of 99. There is hard call protection of 101 in year one, 102 in year two and 101 in year three.

During syndication, pricing was cut from talk of Libor plus 650 bps to 700 bps, the discount revised from 98, and the loan was changed to a fully funded tranche from $750 million funded and $250 million delayed-draw for 90 days.

J.P. Morgan Securities and Goldman Sachs Lending Partners LLC were the joint lead arrangers on the deal and bookrunners with Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC.

Navistar is a Lisle, Ill.-based manufacturer of commercial and military trucks, buses, RVs and diesel engines.

Sabre holds firm

Sabre Industries' $130 million term loan was quoted at 98¾ bid, 99¼ offered on Friday, in line with where it freed up for trading during the previous session, according to a trader.

Pricing on the term loan is Libor plus 575 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 981/2.

During syndication, the spread on the term loan was raised from guidance Libor plus 500 bps to 525 bps.

BNP Paribas Securities Corp. and PNC Capital Markets LLC are the lead banks on the $190 million credit facility (B1/B+), which also includes a $60 million revolver.

Proceeds will help fund the buyout of the company by Kohlberg from Corinthian Capital Group LLC, resulting in net leverage of 2.8 times through the credit facility and 4.3 times total.

Sabre is an Alvarado, Texas-based tower, pole and shelter manufacturer.

Revel closes

In other news, Revel Entertainment Group LLC completed the amendment to its credit facility, increasing the revolver size to $100 million from $50 million, according to a news release.

Pricing on the upsized revolver is Libor plus 750 bps.

Revel is a gaming and entertainment company in Atlantic City, N.J.

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