Wyndham again asks lenders for extension of IRLs, revolver maturities

By Sara Rosenberg

New York, April 3 - Wyndham International Inc. is back again, seeking an amendment that would basically extend the maturity date of the company's IRLs and revolver to June 30, 2006 from June 30, 2004, according to a fund manager. The company previously came to market in February with a similar amendment, which met with investor hesitancy and was reported as not passing.

The Dallas hotel enterprise held a lender call on Wednesday that included the senior lender committee consisting of JPMorgan, Deutsche Bank, Highland Capital, Van Kampen Merritt, ING, Merrill Lynch Investment Management and Credit Suisse Asset Management. This committee is the seven largest holders of Wyndham's debt, making up between 35% to 41% of each tranche.

As before, the company is again proposing that the cash portion of the revolver's pro rata distribution from proceeds of asset sales would be used towards paying down the IRLs. Meanwhile, the revolver availability would be reduced by whatever the pro rata portion of the paydown would have been.

In return for extending the maturity, IRL holders would get a 2% fee payable at maturity (June 30, 2006), based on the outstanding IRLs at June 30, 2005. Furthermore, from the date that the maturity extension becomes effective, which only occurs once $85 million of the IRLs is paid down, there is a 50 basis points payment in kind increase on the coupon. So, IRL holders would get Libor plus 475 basis points plus the additional 50 basis points PIK, the fund manager said.

Additionally, if the company does not reduce overall debt by at least $100 million in 2004 then another 25 basis points of PIK interest is tacked on and the same terms apply for 2005 as well.

So, the maximum amount that IRL holders may receive is the Libor plus 475 basis points coupon and 100 basis points of PIK interest, the fund manager continued.

Wyndham would also give the lenders a security interest in its La Guardia Airport property, which is worth about $35 million.

There is an amendment fee payable to the term loan B holders of only an 1/8 since they are only voting on the allocation of asset sale proceeds. "I would expect that the term B portion would pass," the fund manager said.

IRL holders will receive an amendment fee of 25 basis points for signing. The amendment will become effective if there is 95% approval. The 5% that don't sign would retain their original maturity.

Responses from debt holders are due on April 11.

"We will not be voting for it," the fund manager said. "There's not really much of a difference [between this amendment and the previous one from February]. The 2% fee is payable at maturity, which we might not even get. A more appealing structure would be Libor plus 475 and 600 basis points PIK, that would reduce with loan paydowns. Like after $100 million of asset sales the PIK would reduce to 500 basis points."

If the amendment does not pass, the fund manager anticipates that the company will either find a way to refinance its IRLs and revolver or the company will make an offer that is more economical to debt holders.

After the lender call on Wednesday, the company's term loan B and IRLs started to trade closer to each other, which would make sense if they are going to mature on the same day, the fund manager continued.

On Thursday, however, the IRLs moved up by about a point, once again creating that approximate two point differential between the bid on the B loan and the IRLs. The IRLs were quoted with a 78 bid and the term loan B was quoted with a 76 bid.

"Today I think people are thinking that the amendment won't pass so the IRLs are moving back up," the fund manager explained.

Wyndham has also received some attention lately since the company failed to pay the rent due on April 1 to Hospitality Properties Trust, which owns 27 hotels that are leased to Wyndham under two combination leases.

"It is unclear at this time whether Wyndham has decided to withhold the rents due HPT because it is unable to pay or as a negotiating tactic in order to seek changes in the lease terms," Hospitality Properties said in a news release late Wednesday.

In response, Wyndham said it has "ample liquidity."

"Even in a difficult environment, Wyndham is generating positive cash flow and continues to grow market share for the proprietary Wyndham brand," said Rick Smith, international executive vice president and chief financial officer, in a release. "The two Wyndham subsidiaries' actions with regard to approximately $3.6 million in rent to HPT were purely commercial decisions of the two subsidiaries and not related to Wyndham's overall liquidity."

According to the fund manager, people don't seem very concerned over this non-payment of rent. "I really think it was just a business decision, "the fund manager said. "Their liquidity is fine."

In the primary, Century Maintenance Supply's $130 million credit facility, which launched on Thursday, left a favorable impression on some of the participants, for a few reasons including pricing levels and company performance, a fund manager told Prospect News.

The loan consists of a $25 million five-year revolver with an interest rate of Libor plus 350 basis points and a $105 million seven-year term loan B with an interest rate of Libor plus 450 basis points. Both tranches have a 50 basis points upfront fee, sources said.

"The pricing is appealing. It's been a performing credit for 4½ years now. Out of the box there's three times in senior debt. The company generates approximately $35 million EBITDA on approximately $310 million of sales. I'm favorably impressed," the fund manager said.

Citibank is the lead bank on the deal, which will be used by the company to refinance existing debt.

Commitments are due on April 23 and the loan is expected to close and be funded on April 30.

Century Maintenance Supply is a Houston distributor of maintenance supplies to property management companies.

Meanwhile, timing on Hayes Lemmerz International Inc.'s exit financing facility is still fluid as the company is still working on approval of its plan of reorganization from existing creditors and then a confirmation hearing before the bankruptcy court on April 9, according to a syndicate source.

Last week, the company announced that it extended the deadline for submitting votes on its plan of reorganization from March 28 to April 4. The extension covers two classes of creditors - holders of the pre-petition credit facility secured claims and holders of synthetic facility secured claims - and provides these creditors additional time to complete their evaluation of the plan.

The source explained that work on the exit financing facility would begin after the confirmation hearing is successfully completed.

Currently, the proposed credit facility is set to hit the market somewhere between April and June, although, according to the source, the meeting realistically would not happen till May or June, with "May being the sweet spot".

The exit financing facility is anticipated to total $575 million, with a $450 million term B and $125 million pro rata.

Citibank and Lehman Brothers are the lead banks on the Northville, Mich. auto parts maker's proposed loan.

Hayes Lemmerz and its subsidiaries located in the United States and one subsidiary in Mexico filed voluntary petitions for reorganization under Chapter 11 on Dec. 5, 2001.

Tesoro Petroleum Corp. is currently working on refinancing its entire bank credit facility with a new facility and the issuance of $400 million senior secured notes. Goldman Sachs and Bank One are the lead banks on the new loan, according to market sources.

Currently the company has a $1.275 billion senior secured credit facility, consisting of a five-year $225 million revolving credit facility with a $150 million sublimit for letters of credit, a five-year term loan A and a six-year term loan B.

The San Antonio, Texas refiner and marketer of petroleum products is looking for a debt structure that will increase its ability to borrow for working capital needs, allow it to issue letters of credit and modify financial covenants.

"Our current revolver is $225 million with $150 million letter of credit facility. Our goal is to get that a lot bigger because we've grown. We're a much bigger company now," a company spokesperson said.

TBC Corp. completed its acquisition of Merchant's Inc., the company announced on Thursday. To help fund the acquisition, TBC obtained a $208 million five-year senior credit facility, consisting of a $121 million revolver and $87 million in term loans. Proceeds from the new facility will also be used for future acquisitions and internal growth initiatives. JPMorgan was the lead bank on the deal.

TBC is a Memphis, Tenn. marketer of automotive replacement tires.

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