HCA term loans rise with paydown news; General Motors rallies; LCDX holds steady

By Sara Rosenberg

New York, April 14 - HCA Inc.'s term loans headed higher during Tuesday's trading session following the company's announcement that it intends on repaying some of the debt using proceeds from a notes offering.

In more trading happenings, General Motors Corp.'s bank debt jumped by a couple of points on continued bankruptcy chatter and the LCDX 10 index stayed firm despite equities being down.

HCA up on paydown

HCA's term loan A and term loan B were both stronger during market hours after the company disclosed plans to pay down a portion of the borrowings, according to a trader.

The Nashville-based owner and operator of hospitals and surgery centers saw its term loan A quoted at 90¾ bid, 91½ offered, up from around 90½ bid, 91¼ offered on Monday, the trader said.

Meanwhile, HCA's term loan B saw a stronger rally, moving to 90 bid, 90¾ offered from 88¾ bid, 89¼ offered on Monday, the trader continued.

HCA term A held back by amortization

HCA's term loan A underperformed its term loan B in terms of how much it moved up in trading on the repayment news since whatever is paid down on the A loan will be taken out of upcoming scheduled amortization payments, the trader explained.

"All amortization gets prepaid so it take a lot of amortization out of the A," the trader added.

On Tuesday morning, HCA announced plans to sell $500 million of senior secured first-lien notes due 2019, and late in the day, news emerged that the company was upsizing the deal to somewhere in the range of $1 billion to $1.5 billion.

It is the proceeds from this notes offering will be used to repay term loans under the company's cash flow credit facility.

HCA reveals early financial results

Also on Tuesday, HCA came out with preliminary financial and operating results for the first quarter ended March 31.

For the quarter, the company anticipates revenues to be about $7.4 billion to $7.45 billion, compared to $7.127 billion in the first quarter of 2008.

Income before income taxes and non-controlling or minority interests for the first quarter is expected to be about $600 million to $650 million, compared to $344 million in the previous year.

Adjusted EBITDA for the quarter is expected to be about $1.425 billion to $1.475 billion, compared to $1.18 billion in the comparable 2008 period.

And, interest expense in the first quarter is anticipated to be about $471 million, compared to $530 million last year.

Complete first-quarter results are planned to be announced on April 27.

General Motors strengthens

General Motors' bank debt traded better by a couple of points on Tuesday as investors were still reacting to the expectation that bankruptcy seems likely and the view that recoveries will be good, according to traders.

The Detroit-based automotive company's term loan was quoted by one trader at 52 bid, 54 offered, and by a second trader at 51½ bid, 53½ offered, with both traders agreeing that it closed out Monday at 46½ bid, 48½ offered.

And, the company's revolver was quoted by the first trader at 44 bid, 46 offered, up from 40½ bid, 42½ offered on Tuesday, and by the second trader at 43 bid, 46 offered, who placed the revolver at 36½ bid, 39 offered on Tuesday.

"Closer you get to some sort of resolution, the market reacts positively. Seems like bankruptcy is more imminent," the first trader added.

LCDX remains firm

The LCDX 10 index was pretty much in line with previous levels even though stocks were weaker, according to traders.

The index was quoted by one trader at 76.40 bid, 75 offered and by a second trader at 76.30 bid, 76.60 offered versus levels of around 76.40 bid, 76.60 offered on Tuesday.

As for stocks, Nasdaq closed down 27.59 points, or 1.67%, Dow Jones Industrial Average closed down 137.63 points, or 1.71%, S&P 500 closed down 17.23 points, or 2.01%, and NYSE closed down 108.78 points, or 2.01%.

Roskam wraps at initial terms

Moving to primary happenings, Roskam Baking Co. completed syndication of its $115 million credit facility at original price talk and terms, and the deal has been funded, according to a market source.

The facility consists of a $20 million revolver and a $95 million term loan, with both tranches priced at Libor plus 650 basis points with a 3.25% Libor floor and an original issue discount of 97.

CIT and GE Capital acted as the joint lead arrangers on the deal that was syndicated in a club style.

Proceeds were used to help fund the acquisition of the company by Wind Point Partners, which was completed last Thursday.

Roskam Baking is a Grand Rapids, Mich.-based commercial bakery.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.