Unvision retreats following run-up; Rite Aid bid fluctuates; Foamex holds steady

By Sara Rosenberg

New York, Jan. 23 - Univision Communications Inc.'s term loan B softened in trading during the relatively quiet Friday session as the excitement over the company's recently settled lawsuit seemed to fade a little bit.

In other news, Rite Aid Corp.'s term loan was bid higher by some as the company announced plans for a new securitization term loan and Foamex International Inc.'s first-lien term loan held in at previous levels despite news coming out that the company decided not to make interest payments on its loans.

Unvision slides

Unvision's term loan B gave up a good portion of its gains from the previous session as things seemed to calm down a bit now that the initial excitement over a settled lawsuit with Grupo Televisa SAB disappeared, according to traders.

The term loan B was quoted by one trader at 48½ bid, 49½ offered and by a second trader at 48 bid, 50 offered. On Thursday the loan was seen at 51 bid, 53 offered, after rallying from Wednesday's levels of 46 bid, 48 offered.

The debt had run-up on Thursday because of news that the lawsuit with Televisa was settled and dismissed, and that the current Program License Agreement, which runs through 2017, was revised to increase payments to Televisa in exchange for incremental rights for Univision.

Univision is a Los Angeles-based Spanish-language media.

Rite Aid bid up by some

Rite Aid's term loan was seen bid a little higher by some market players, following the company's announcement that it is working on getting a new accounts receivable securitization loan, according to a market source.

The source said that he saw the term loan quoted at 59½ bid, versus a 58 bid on Thursday.

However, a different source claimed that the debt was basically unchanged at levels in the 58 bid, 62 offered context.

On Friday, Rite Aid revealed in an 8-K filed with the Securities and Exchange Commission that it has received a commitment for an up to $200 million second-lien accounts receivable securitization term loan due Sept. 14, 2010.

The loan is priced Libor plus 1,400 basis points and contains 101 call protection.

Citigroup is the lead arranger and bookrunner on the deal, and has committed to provide $100 million of the loan, while the remaining $100 million will be syndicated on a best-efforts basis through the earlier of closing and Feb. 20.

Proceeds will be used to provide funding for the acquisition of receivables and/or participation interests therein.

In addition, the company announced that it amended its existing receivables financing agreement, extending the commitment for 364 days until Jan. 21, 2010.

In connection with the amendment, borrowing availability under the existing facility was reduced by about $100 million and there will be an additional roughly $100 million step-down on Feb. 20.

Moody's cuts Rite Aid ratings

Also on Friday, Moody's Investors Service said that it downgraded Rite Aid's corporate family ratings to Caa2 from Caa1, with a negative outlook, and its first-lien credit facility to B3 from B2.

According to the rating agency, the downgrade acknowledges the near to medium-term pressures that Rite Aid's liquidity faces should it be unable to generate very significant improvements in its free cash flow and reflects the opinion that the current capital structure is likely unsustainable at the current level of operating performance.

Moody's went on to say that it expects availability under Rite Aid's $1.75 billion asset-based revolver will continue to erode unless the company is able to significantly reduce its free cash flow deficits through improvements in working capital and operating performance.

In addition, the newly revised corporate rating considers that the company's revolver and $145 million term loan mature in September 2010 and that, given the current state of the credit markets, Rite Aid faces potential difficulties in refinancing these facilities, Moody's continued.

Rite Aid is a Camp Hill, Pa.-based operator of a chain of retail drugstores.

Foamex unmoved by missed payments

Foamex's first-lien term loan shrugged off news that interest payments were skipped by the company as levels stayed in line with where they were previously seen, according to a trader.

The first-lien term loan was quoted at 28 bid, 32 offered, unchanged from Thursday, the trader said.

"People knew this was happening," the trader added in explanation of why the announcement didn't affect bank debt levels.

On Friday morning, Foamex said that it did not make the $7.3 million interest payments on its first- and second-lien term loans that were due on Jan. 21 after the expiration of a grace period.

The company said that it expects to get a forbearance agreement from its revolver and first-lien term loan lenders shortly, and that it is currently in talks with lenders holding more than a majority of its first-lien term loan about restructuring options including a possible amendment.

Foamex ratings downgraded

In addition to the interest payment news, Foamex was also hit with downgrades from Moody's on Friday.

The company's corporate rating was cut to Ca from Caa2, the first-lien term loan was cut to Ca from Caa2 and the second-lien term loan was cut to C from Caa3. The outlook is negative.

Moody's said that the downgrade was a result of the lenders being able to require all amounts outstanding and exercise all their rights and remedies under the credit facility because of the missed interest payments.

Foamex is a Media, Pa.-based producer of polyurethane foam-based and specialty comfort products.

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