John Maneely, Talecris up on buyouts; Tribune, Solo Cup move with numbers; AlliedBarton tweaks deal

By Sara Rosenberg

New York, Aug. 13 - John Maneely Co. and Talecris Biotherapeutics Inc. saw bank debt levels rally on Wednesday after both companies separately revealed that that they are being acquired, with John Maneely going to Novolipetsk Steel and Talecris going to CSL Ltd.

Also in trading, Tribune Co.'s term loan B was higher and Solo Cup Co.'s term loan softened on the back of the release of financial results by both companies. Meanwhile, General Motors Corp. and Ford Motor Co. slid lower.

And Texas Competitive Electric Holdings (TXU) was better after its parent company announced a minority sale, and LCDX 10 was down with equities.

Moving to the primary market, AlliedBarton Security Services made some changes to its credit facility involving, among other things, amortization and covenants to make the deal more attractive to investors.

John Maneely's term loan B was considerably stronger during the session following news that Novolipetsk Steel is purchasing the company from the Carlyle Group and the Zekelman family, according to sources.

One trader said that the term loan B was quoted at 98½ bid, 99½ offered, up from around the 93 bid, 94 offered context. A second source, however, saw term loan B levels in the 98¼ bid, 99¼ offered area on Wednesday.

Novolipetsk Steel, a Russian steel producer, is acquiring John Maneely for $3.53 billion on a debt free, cash free basis.

The purchase will be financed from available bank commitments, including Novolipetsk Steel's recently established $1.6 billion pre-export finance facility and a $2 billion bridge commitment provided by Merrill Lynch, Deutsche Bank and Societe Generale.

The transaction is expected to close in the fourth quarter, subject to customary regulatory approvals.

JPMorgan, Goldman Sachs and GMP Securities provided financial advice to John Maneely, and Merrill Lynch is the exclusive financial adviser to Novolipetsk Steel.

John Maneely is a Beachwood, Ohio-based steel pipe and tube manufacturer.

Talecris gains ground

Talecris also announced a buyout agreement, with CSL being the acquirer, and as a result, Talecris' first-lien term loan also moved up by a couple of points in trading, according to a trader.

The first-lien term loan was quoted at 97½ bid, 98½ offered, up from Tuesday's levels that were wrapped around 93, the trader said.

On Tuesday night, Talecris said that it has agreed to be purchased by CSL from Cerberus Capital Management LP and Ampersand Ventures for $3.1 billion in cash, including net debt, which was about $1.2 billion as of June 30.

Closing of the transaction is subject to receipt of certain regulatory approvals as well as other customary conditions.

If the necessary approvals are not obtained within one year, either CSL or Talecris will have the right to terminate the transaction.

Morgan Stanley and Goldman Sachs served as Talecris' financial advisers in connection with the acquisition, and Sullivan & Cromwell LLP and Arnold & Porter LLP provided legal advice. CSL was advised by Merrill Lynch and Simpson Thacher & Bartlett LLP.

Talecris is a Research Triangle Park, N.C.-based biotherapeutic and biotechnology company that discovers, develops and produces critical care treatments for people with life-threatening disorders. CSL is and Australia-based developer and manufacturer of vaccines and plasma protein biotherapies.

Tribune improves

Tribune's term loan B gained some ground during market hours after the company revealed second-quarter and six-month results, according to a trader.

The term loan B was quoted at 68 bid, 68½ offered, up a quarter of a point on the day, the trader said.

For the second quarter, the company reported a net loss of $4.5 billion, compared to net income of $36 million in the second quarter of 2007.

Loss from continuing operations for the quarter was $3.8 billion, compared with income from continuing operations of $35 million last year.

The company said that the loss from continuing operations was due to after-tax non-cash charges of $3.8 billion to write down its publishing goodwill and newspaper masthead intangible assets.

Tribune also reported a loss from discontinued operations of $705 million in the second quarter, compared with income from discontinued operations of $1 million in the second quarter of 2007.

Operating revenues decreased 6%, or $67 million, to $1.1 billion when compared to the prior-year period.

And, operating cash flow from continuing operations decreased 2% to $221 million in the second quarter from $226 million last year.

"Our publishing results are, for the most part, in line with industry trends, which remain consistent with what we reported in the first quarter," said Sam Zell, chairman and chief executive officer, in a news release. "Most importantly we have repaid an additional $807 million of borrowings under the tranche X facility from the net proceeds of our asset-backed commercial paper program and from the Newsday transaction. These payments satisfy the December 2008 portion of the tranche X facility, and leave us with a remaining principal balance of $593 million due in June 2009.

"Since the beginning of the year, we have launched dozens of programs and products that have the potential to make a meaningful impact on our future, and we have made significant progress in aligning our expenses with the realities of an industry in recession. We remain optimistic and are confident in the strength of our brands and the talent within our company," Zell added in the release.

For the first half of 2008, Tribune's net loss was $2.7 billion, compared to net income of $13 million in the first half of 2007.

Loss from continuing operations for the six months was $2 billion, compared with income from continuing operations of $41 million last year.

The company also reported a loss from discontinued operations of $718 million in the six-month period, compared with loss from discontinued operations of $28 million in the 2007 comparable period.

And, operating revenues for the six-month timeframe decreased 6.6% to $2.1 billion from $2.3 billion in last year's first half.

Tribune is a Chicago-based media company.

Solo Cup inches lower

Solo Cup's term loan was a bit weaker on Wednesday on the heels of the company's recent release of earnings for the second quarter and the first six months of the year, according to a trader.

The term loan was quoted at 97 bid, 97½ offered, down from previous levels of 97 3/8 bid, 97 7/8 offered, the trader said.

On Tuesday, Solo Cup announced that for the second quarter net sales were $518.5 million, compared to $575.9 million for the 2007 quarter.

The company said that the decline in sales volume can be attributed to the divestiture of non-core product lines, strategic consolidation of its product portfolio and, to a lesser extent, external market factors.

Net income for the quarter was $8.3 million, compared to net income of $3.1 million last year.

Operating income for the quarter was $28.5 million, compared to $23.4 million in the previous comparable period.

And, adjusted EBITDA from continuing operations was $51.4 million versus $47.7 million last year.

For the 26 weeks ended June 29, net sales were $979.8 million, compared to $1.059 billion for the 2007 timeframe.

Net income for the six-month period was $10.5 million, compared to a net loss of $35.7 million last year.

Operating income for the six months was $46.4 million, compared to $8.8 million in the previous comparable period.

And, adjusted EBITDA from continuing operations was $98.8 million, compared to $56.9 million last year.

As of June 29, the company had $146 million of liquidity under its revolving credit facility and cash on hand.

Solo Cup is a Highland Park, Ill.-based provider of single-use products used to serve food and beverages.

GM, Ford soften

General Motors and Ford both saw their term loan levels come in during the trading session, according to a trader.

GM, a Detroit-based automotive company, saw its term loan quoted at 74½ bid, 75½ offered, down from 75¼ bid, 76¼ offered, the trader said.

And, Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 77½ bid, 78 offered, down from 78 bid, 78½ offered, the trader continued.

The trader explained that it is possible that GM's term loan performance could potentially be related to news of a downgrade by Moody's Investors Service, but "I think most of that is expected and Ford was also down."

On Wednesday, Moody's lowered the ratings of GM, including the corporate family rating to Caa1 from B3 and senior secured credit facility to B1 from Ba3. The outlook is negative.

Moody's said that the downgrade reflects the challenges the company will face in reestablishing a competitive position in the U.S. automotive market and generating positive operating cash flow.

Challenges include annual industry sales that could remain below 15 million units through 2009, the shift in consumer demand away from trucks and SUVs, the 18- to 24-month timeframe necessary for the company to meaningfully expand its portfolio of mid and small vehicles, and the difficulties it will encounter in establishing pricing power in the car and crossover segments.

"GM has a pretty good track record in achieving its cost reduction targets and structuring transactions that help raise capital. It's reasonable to expect that the plan being implemented now will help strengthen the company's liquidity position, which otherwise could have become very strained by late 2009," said Bruce Clark, senior vice president with Moody's, in the ratings release.

"The most difficult challenge facing GM and the other domestic producers will be accelerating the introduction of fuel efficient vehicles, and convincing consumers that these vehicles offer as good a value proposition Asian product. The additional liquidity that will be raised by GM's operating plan gives the company more time to make this transition, but it will remain a very difficult transition to implement," Clark added in the release.

TXU trades up

Texas Competitive's term loan debt was stronger on Wednesday after parent company Energy Future Holdings Corp. announced that it is selling an approximate 20% minority ownership interest in Oncor Electric Delivery Co. LLC, according to a trader.

Texas Competitive's term loan B-1 was quoted at 93 bid, 94 offered, up from 92½ bid, 93½ offered, its term loan B-2 was quoted at 93¼ bid, 94¼ offered, up from 92½ bid, 93½ offered and its term loan B-3 was quoted at 92¾ bid, 93¾ offered, up from 92 3/8 bid, 93 3/8 offered, the trader said.

The trader explained that the debt traded higher since investors are speculating that proceeds from the minority sale in Oncor could possibly be used to repay some of the Texas Competitive loans.

Energy Future Holdings is selling the roughly 20% interest in Oncor to an investor group led by Borealis Infrastructure Management and GIC Special Investments for $1.254 billion.

Among other conditions necessary for completion, the transaction will be reviewed by the Committee on Foreign Investment in the U.S., and will only close once that process is complete.

Credit Suisse acted as financial adviser to Energy Future Holdings, and Lehman Brothers acted as financial adviser to the investor group in connection with the transaction.

Texas Competitive is a Dallas-based energy company.

LCDX dips

LCDX 10 was a touch lower in trading as the index was simply tracking equities, according to a trader.

The index was quoted at 96.80 bid, 96.90 offered, down from 96.95 bid, 97.05 offered, the trader said.

Nasdaq closed down 1.99 points, or 0.08%; the Dow Jones Industrial Average closed down 109.51 points, or 0.94%; S&P 500 closed down 3.76 points, or 0.29%; and NYSE closed down 23.32 points, or 0.28%.

AlliedBarton fine-tunes loan

Switching to new deal happenings, AlliedBarton Security Services made some revisions to its $380 million senior secured credit facility (Ba3/B+), according to fund managers.

Under the changes, amortization on the loan was bumped up primarily in years two and three, fund managers said.

In addition, the leverage and the interest coverage ratio covenants were tightened and the equity cure in the credit agreement was modified, the fund managers added.

The credit facility consists of a $55 million revolver and a $325 million term loan, with both tranches talked at Libor plus 450 basis points.

The term loan has a 3.25% Libor floor and is being offered at an original issue discount of 98.

Commitments are now due from lenders on Thursday. The original commitment deadline had been set for this past Tuesday.

Credit Suisse, HSBC and GE Capital are the lead banks on the deal that will be used to help fund the buyout of the company by the Blackstone Group.

The transaction is expected to close in August subject to certain government approvals and other customary conditions.

AlliedBarton is a King of Prussia, Pa.-based provider of security personnel.

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