UAL down on traffic numbers; Tousa slides; LCDX weakens; Delphi joins cast of exit financing deals

By Sara Rosenberg

New York, Jan. 4 - UAL Corp.'s term loan B headed lower on Friday after the company reported a decrease in December traffic, Tousa Inc.'s second-lien term loan softened, ending its recent mini-rally, and LCDX and cash were weaker as unemployment numbers added to economic fears.

In other news, the week of Jan. 7 will be dominated by exit financing credit facilities as Delphi Corp. joined the list, which already included Solutia Inc. and Dana Corp., so that now close to $9 billion of exit financing will be presented to lenders.

UAL's term loan B traded down during Friday's market hours on the heels of the company's release of disappointing preliminary traffic results for the month of December, according to a trader.

The term loan B was quoted at 92½ bid, 93½ offered, down from 93 bid, 94 offered, the trader said.

On Thursday night, UAL reported a December passenger load factor of 78.8%, and total scheduled revenue passenger miles decreased by 1.2% on a capacity decrease of 0.1% in scheduled available seat miles compared with the same period in 2006.

The Chicago-based air transportation services provider said that its operations were affected by 19 severe weather days during the month of December.

The severe weather also resulted in fourth-quarter capacity coming in lower than prior guidance. Year-over-year mainline capacity will be down 1% versus guidance of down 0.8%.

Tousa falls with market

Tousa's second-lien term loan reversed its course on Friday as it fell by about a point as a result of overall market weakness that was sparked by unemployment numbers, according to a trader.

The second-lien term loan was quoted at 91½ bid, 92½ offered, down from Thursday's levels of 92½ bid, 93½ offered, the trader said.

The second-lien term loan started out on Wednesday around the 91 bid context and had been climbing up over the Wednesday and Thursday sessions after the Hollywood, Fla.-based company revealed that it failed to make its semiannual interest payments on its 9% senior notes due 2010 and 10 3/8% senior subordinated notes due 2012.

Sources had said that the second-lien was stronger on the missed bond payment because it meant that there was less money going out the door.

However, on Friday, the second-lien term loan was pressured by general market weakness, maybe a bit harder than other names out there because the company operates in the volatile homebuilding sector, after unemployment results for December were announced.

In December, the number of unemployed persons increased by 474,000 to 7.7 million and the unemployment rate rose by 0.3% to 5%, while nonfarm payroll employment was essentially unchanged at plus 18,000, according to the Bureau of Labor Statistics of the U.S. Department of Labor.

By comparison, a year earlier, the number of unemployed persons was 6.8 million and the jobless rate was 4.4%.

The results showed that job growth in several service-providing industries, including professional and technical services, health care and food services, was largely offset by job losses in construction and manufacturing.

LCDX, cash dip lower

LCDX 9 and the cash market in general were noticeably lower during market hours, hit by the rumblings of a recession that the unemployment results inspired, according to a trader.

The index was quoted around 96.15 bid, 96.25 offered, down from 96.70 bid, 96.80 offered, the trader said.

Cash was down about an eighth to a quarter of a point across the board, the trader added.

Delphi added to calendar

As for the primary, the week of Jan. 7 is all about exit financing as there are now three deals of that nature that are scheduled to launch since Delphi was added to the list on Friday, and between those deals, the total amount of funds looking to be raised is $8.9 billion.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, has set a bank meeting for Tuesday to launch its proposed $5.3 billion exit financing credit facility that consists of a $1.6 billion ABL revolver and a $3.7 billion first-lien term loan, according to a market source.

JPMorgan and Citigroup are the lead banks on the deal that will be used to repay the company's debtor-in-possession financing facility, to fund other payments required upon emergence from Chapter 11 and to conduct post-reorganization operations.

According to filings with the Securities and Exchange Commission, the ABL revolver is expected to carry pricing of Libor plus 225 basis points and the first-lien term loan is expected to carry pricing of Libor plus 375 bps. However, official price talk on the deal is not yet available.

Those filings also said that other exit financing will come from a $750 million second-lien note at 9½% that will be raised in the capital markets and a $750 million second-lien note at 9½% that will be issued to General Motors Corp. in connection with plan of reorganization distributions.

Delphi's launch date announcement came on the heels of Solutia and Dana revealing their bank meeting dates during the previous session.

Solutia will be launching its proposed $1.6 billion exit financing credit facility, comprised of a $400 million five-year asset-based revolver (Ba1) and a $1.2 billion seven-year term loan B (B1/B+), on Monday, while Dana will be launching its proposed $2 billion exit financing credit facility, comprised of a $650 million five-year asset-based revolver and a $1.35 billion seven-year term loan B, on Tuesday, sources previously told Prospect News.

Citigroup, Goldman Sachs and Deutsche Bank are the joint lead arrangers and joint bookrunners on the Solutia deal that will be used to pay creditors under the company's plan of reorganization and to fund ongoing operations after its emergence from Chapter 11.

As part of its exit financing package, Solutia has also received a commitment for a $400 million senior unsecured bridge facility, which will not be utilized if $400 million of senior notes due 2016 are issued prior to emergence, and the company has arranged for a fully backstopped rights offering that will raise $250 million in new equity capital.

Solutia is a St. Louis-based manufacturer and provider of performance films, specialty chemicals and an integrated family of nylon products.

Citigroup, Lehman Brothers and Barclays are the lead banks on the Dana deal that will be used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

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