Delphi DIP, General Motors move higher with rest of cash market; LCDX stronger; Mobile Mini floats talk

By Sara Rosenberg

New York, April 7 - Delphi Corp.'s debtor-in-possession second-lien term loan and General Motors Corp.'s term loan both were better with the overall cash market as chatter surrounding Delphi's problematic emergence from bankruptcy died down.

Also in trading, LCDX 9 gained ground as people were getting ready for the roll into LCDX 10 on Tuesday.

In other news, pricing details on Mobile Mini Inc.'s proposed credit facility emerged as the company filed a proxy statement with the Securities and Exchange Commission.

Delphi and General Motors both saw some improvement in their bank debt levels on Monday, along with the cash market in general, as investors took a break for the day from speculating on Delphi's future and General Motors' role in that future, according to a trader.

Delphi's DIP second-lien term loan was quoted at 98½ bid, 99½ offered, up from 98 3/8 bid, 99 3/8 offered, the trader said.

Meanwhile, Delphi's exit facility first-lien term loan was quiet with no real levels seen, the trader remarked.

As for General Motors, its term loan was quoted at 90¼ bid, 91¼ offered, up from 89½ bid, 90½ offered on Friday, although there was not much volume in the name, the trader added.

On Friday morning, news emerged that Appaloosa Management LP terminated its agreement to invest $2.55 billion in Delphi because it believes that Delphi breached the agreement in a number of ways, including with respect to the exit financing and investment agreements with General Motors.

As a result, Delphi's formal closing process to emerge from Chapter 11 couldn't be completed on Friday as planned.

In reaction to the events, market players were filled with uncertainty over how and if Delphi's emergence will take place and what type of action, if any, General Motors will take to help the process.

On Monday, Standard & Poor's said that, as a result of the Appaloosa pull out, it no longer expects to assign its corporate credit rating of B and debt issue ratings to Delphi upon the company's emergence from Chapter 11 under the most recent plan of reorganization.

"The timing and details of any revised emergence plan by Delphi remain uncertain. We plan to monitor Delphi's efforts to secure new equity funding or alter its proposed capital structure in an effort to emerge at a later date," the S&P release added.

Delphi is a Troy, Mich.-based automotive electronics manufacturer. General Motors is a Detroit-based automaker.

Cash market stays positive

The overall cash market experienced a nice run-up during the trading session, with things up about a quarter to a half a point, as there was a "bullish sentiment in the loan market," according to traders.

For example, Texas Competitive Electric Holdings Co. LLC (TXU), a Dallas-based energy company, saw its term loan B-2 quoted at 92¾ bid, 93¼ offered, up from 92½ bid, 93 offered, traders said.

Georgia-Pacific Corp., an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals, saw its term loan B quoted at 94¾ bid, 95¼ offered, up from 94 bid, 94½ offered, traders continued.

First Data Corp., a Greenwood Village, Colo., provider of electronic commerce and payment services, saw all of its term loan B debt quoted at 91¼ bid, 92¼ offered, up from 91 bid, 92 offered.

Harrah's Operating Co. Inc., a Las Vegas-based provider of branded casino entertainment, saw its term loan B-2 quoted at 92 3/8 bid, 93 3/8 offered, up from 92 1/8 bid, 93 1/8 offered.

And, Alltel Communications Inc., a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 quoted at 91 bid, 92 offered, up from 90 bid, 91 offered. Its term loan B-1 was quoted at 89¾ bid, 90¾ offered and its term loan B-2 was quoted at 90¼ bid, 91¼ offered, with these tranches up about an eighth to a quarter of a point, traders said.

"All the on the run names continue to be very active. Nothing specific [pushing cash up]. In general, positive view," one trader remarked.

"Backlog is getting done. [For example,] Alltel still has B-2 and B-1 hanging around. Seeing orders coming in for those tranches. Some pretty good interest in them. A little more liquidity. A little more volume today relative to how it's been, so that's encouraging," a second trader added.

LCDX trades up

LCDX 9 was higher on Monday as there was some short covering and profit taking ahead of Tuesday's roll into LCDX 10, according to traders.

One trader quoted the index at 95.25 bid, 95.35 offered and another trader quoted the index at 95.20 bid, 95.30 offered. On Friday, the index went out around 94.90 bid, 95.05 offered.

"It traded as high as, like, 95.50. Decent amount of activity in the 40 to 50 range. It has since traded down," one trader remarked.

"A lot of volume is short covering. At certain levels guys are stepping in and selling it. Hard to pinpoint because guys are cleaning up positions prior to the roll," the trader added.

Mobile Mini price talk

Moving to new deal happenings, Mobile Mini expects its proposed $1 billion five-year asset-based senior secured revolving credit facility to carry initial pricing of Libor plus 225 bps, the company said in a PREM14A filed with the SEC on Monday. Pricing will be based on a leverage grid.

By comparison, when the company first announced the deal in February, it was said that expected pricing on the revolver was Libor plus 200 bps.

Final pricing on the revolver is subject to adjustment pursuant to a "market flex" provision.

The unused fee is 37.5 bps if the unused amount is less than or equal to 50% of the aggregate commitments, or 25 bps if the unused amount is greater than 50%.

The revolver will have a maximum $200 million U.K. subfacility and a $250 million accordion feature.

Financial covenants will include a maximum leverage ratio, minimum fixed-charge coverage ratio and minimum utilization rate, each of which will only be tested if excess availability under the borrowing base is less than the greater of $100 million and 10% of the total commitments under the credit facility.

As was previously reported, the deal has already been launched to senior managing agents round and the retail launch is expected in the next month or so.

Deutsche Bank, Bank of America and JPMorgan are the lead banks on the deal that will be used to help fund the acquisition of Mobile Storage Group Inc. from Welsh, Carson, Anderson & Stowe in a transaction valued at $701.5 million.

Under the transaction agreement, Welsh, Carson, together with the other equity holders, will be converting substantially all of their equity ownership in Mobile Storage into Mobile Mini preferred stock.

Mobile Mini will assume about $535 million of Mobile Storage's outstanding indebtedness and will acquire all outstanding shares of Mobile Storage for $12.5 million in cash and shares of newly issued Mobile Mini convertible preferred stock with a liquidation preference of $154 million.

The convertible preferred stock will be convertible into 8.55 million Mobile Mini common shares, representing a conversion price of $18 per Mobile Mini share and resulting in fully diluted ownership in Mobile Mini of 19.8% for Mobile Storage Group stockholders.

Pro forma for the acquisition, Mobile Mini estimates that total debt will be about $960 million. In 2007, Mobile Mini generated EBITDA of $133.9 million, excluding stock compensation expense, and Mobile Storage Group generated EBITDA of $86.1 million, adjusted for certain items and excluding stock compensation expense. With $25 million of forecast cost synergies, the adjusted EBITDA for 2007 is about $245 million, resulting in pro forma leverage of 3.9 times.

The transaction is expected to close as early as June, subject to approval by Mobile Mini stockholders, governmental approvals, receipt of the new revolver and customary conditions.

Tempe, Ariz.-based Mobile Mini and Glendale, Calif.-based Mobile Storage are providers of portable storage.

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