Huntsman rises as lawsuit progresses; Discovery breaks; Visteon dips; First Data, TXU slide

By Sara Rosenberg

New York, May 12 - Huntsman Corp.'s term loan gained some ground during Tuesday's trading session on the back of news that the company received a ruling from the court that will allow its lawsuit against the banks that were going to finance its merger with Hexion Specialty Chemicals Inc. to proceed.

In other news, Discovery Communications Holding LLC's term loan C freed up for trading after pricing finalized at the tight-end of original guidance, and the debt traded around above its original issue discount price.

Also, Visteon Corp.'s term loan softened with earnings, and the cash market in general felt a little weaker amidst light trading, with some of the more liquid names, such as First Data Corp. and Texas Competitive Electric Holdings (TXU), feeling the pressure.

Huntsman up on trial news

Huntsman's term loan pushed its way higher after the company announced that its multi-billion dollar suit against Credit Suisse and Deutsche Bank will move forward, according to a trader.

The term loan was quoted at 86½ bid, 87½ offered, up from Monday's levels of 85½ bid, 86½ offered, the trader said.

On Monday night, Huntsman said that a judge ruled in its favor on six motions, clearing the way for the trial against the two banks to proceed on June 8.

The trial will address the following claims against the banks - common law fraud in connection with the Basell agreement, tortious interference with Huntsman's merger agreement with Hexion, negligent misrepresentation and civil conspiracy.

Huntsman submitting billions in damages

Under the recent court ruling, Huntsman will be allowed to submit to the jury damages based upon the merger consideration that would have been paid to its shareholders under its merger agreements with Basell, which was $3.6 billion, and Hexion, which was $4.6 billion.

The merger agreement with Hexion that fell through was reached on July 12, 2007. Under it, Hexion had agreed to acquire Huntsman in an all-cash transaction valued at $10.6 billion, including the assumption of debt.

Before making the deal with Hexion, Huntsman had signed - and then later terminated - a definitive merger agreement with Basell in which Basell was going to buy the company for $25.25 per share, or $9.6 billion.

The Huntsman, Hexion combination was going to be funded by debt commitments from Credit Suisse and Deutsche Bank. In the original commitment, the banks had agreed to provide Hexion with a $9.4 billion credit facility, consisting of an $8.4 billion term loan and $1 billion revolver, or a $7.4 billion term loan and $2 billion asset-based revolver.

Huntsman is a Salt Lake City, Utah-based manufacturer and marketer of differentiated chemicals.

Discovery frees to trade

Discovery Communications' term loan C hit the secondary market on Tuesday after pricing was set at the tight-end of talk as a result of strong demand, according to a market source.

The $500 million term loan C was quoted at 99 3/8 bid, 99¾ offered by the end of the day after breaking at 99¼ bid, 99 5/8 offered, the source said.

Pricing on the loan is set at Libor plus 325 basis points, after finalizing from original guidance of Libor plus 325 bps to 350 bps, the source added. As initially announced, there is a 2% Libor floor and the loan was sold to investors at an original issue discount of 98.

Bank of America and JPMorgan are the lead banks on the deal that will be used for general corporate purposes, with Bank of America the left lead.

Discovery Communications is a Silver Spring, Md.-based nonfiction media company.

Visteon trades down

Visteon's term loan was weaker following the company's release of first-quarter results that showed a drop in sales and EBITDA, according to a trader.

The term loan was quoted at 25 bid, 27 offered, the trader said. Prior to the release of numbers, levels on the term loan were 27 bid, 29 offered. After the earnings came out very late in the day Monday, the levels dropped to the 25 bid, 27 context that continued to be seen on Tuesday, the trader added.

For the first quarter, Visteon reported sales of $1.35 billion, down 53% from sales of $2.86 billion in the comparable period last year.

Adjusted EBITDA for the quarter was $22 million, compared with $166 million in the prior year.

And, net income for the quarter was $2 million, or $0.02 per share, compared to a net loss of $105 million, or $0.81 per share, in the first quarter of 2008.

The 2009 first quarter net income includes a non-cash gain of $95 million related to deconsolidation of Visteon UK Ltd. net liabilities.

Visteon uses more cash

In the first quarter, Visteon's free cash flow was a use of $300 million, compared with a use of $200 million for the same period in 2008.

As of March 31, cash balances totaled $767 million, of which $163 million was classified as restricted cash.

In addition, the company's total debt was $2.72 billion, which included $105 million drawn on its asset-based U.S. revolving credit facility and $43 million outstanding under its European receivables securitization facility.

Visteon looking to reduce costs

Visteon also said on Monday that it continues to execute cost-reduction actions in response to the current market conditions beyond those associated with the recently completed three-year improvement plan.

These additional cost-reduction actions include previously announced global salaried and hourly workforce reductions, shortened work weeks, temporary reductions in pay and elimination of 401(k) matching contributions and merit increases, and other measures.

"Our first-quarter results were significantly affected by the global reduction in vehicle production," said Donald J. Stebbins, chairman and chief executive officer, in a news release. "Visteon is taking the necessary steps to protect capital, maintain viable operations and position our global business for future success."

Visteon is a Van Buren Township, Mich.-based automotive supplier.

First Data, TXU lower

In more trading happenings, First Data and Texas Competitive both saw levels in their term loan B debt fall on Tuesday as the general market felt somewhat softer on very thin volume, according to traders.

"Probably just profit takers," one trader remarked. "Stuff has run up quite a bit over the past few weeks."

First Data, a Greenwood Village, Colo.-based provider of electronic commerce and payment services, saw its term loan B quoted at 73¾ bid, 74¾ offered, down from 75½ bid, 76¼ offered, traders said.

And, Texas Competitive, a Dallas-based energy company, saw its term loan B-2 quoted at 71 5/8 bid, 72 1/8 offered, down from 72½ bid, 73 offered, traders continued.

Meanwhile, the LCDX 12 index was basically unchanged on the day with levels of 83.15 bid, 83.45 offered, compared to 83.10 bid, 83.30 offered on Monday, another trader added.

© 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.