Ply Gem new notes, loan buoyed; Trump gives back gains; GMAC slips on mistaken Cerberus report

By Stephanie N. Rotondo

Portland, Ore., June 2 - Ply Gem Industries Inc. dominated trading in Monday's distressed bond market.

The company announced Monday that it would launch a new $700 million issue of notes. That, combined with a new $150 million revolving credit facility, will be used to pay off the company's senior credit facilities.

The news sent Ply Gem's term loan higher, and the new issue gained nearly a point as well. However, the company's old notes fell. One trader explained the move was a response to a lower earnings forecast.

Meanwhile, Trump Entertainment Resorts Inc. saw its bonds give back some of the gains they acquired last week on news of an asset sale. It was unclear why the debt fell, but one trader speculated it was simply a case of too much too soon.

An apparently erroneous news report claiming that Cerberus Capital had cut its stake in GMAC LLC put pressure on the mortgage lender's bonds. However, Cerberus later issued a statement refuting the claim.

Ply Gem: The nom du jour

Ply Gem's term loan gained a couple of points in trading as the company revealed that it will be repaying its existing credit facility in full.

The term loan was quoted at par ¼ bid, par ¾ offered, up from 97¼ bid, 97¾ offered on Friday, a trader said.

The reason why the term loan moved above par is because it contains 101 call protection, the trader explained.

On Monday morning, Ply Gem said that it will get a new $150 million senior secured asset-based revolver and sell about $700 million in senior secured notes due 2013 to refinance its existing credit facility.

The new corporate debt, a five-year 11¾% note priced at 99.072, gained as it hit the market. One source quoted the notes at 99.5 bid, 99.75 offered, while another called the bonds up a quarter-point at 99.25.

"It's all about Ply Gem," a trader said of the day's notable name. "It seems like they priced it perfectly again - it had nowhere to go."

The trader said Ply Gem's old bonds, the 9% notes due 2012, fell about 2 points from Friday's levels to 68. Another trader also saw the debt trading in that context, explaining that the company lowered its earnings guidance during a conference call held Monday afternoon.

Credit Suisse and UBS are the lead banks on the new revolver, with Credit Suisse the left lead.

The company's existing credit facility had just been amended on May 23 to increase pricing, add a 3.25% Libor floor, add two years of 101 call protection under the term loan and revise covenants.

Under the amendment, pricing on the revolver and term loan was increased to a range of Libor plus 575 basis points to 725 bps, depending on senior secured leverage, and the unused fee on the revolver was increased to between 50 bps to 62.5 bps.

Also as part of the amendment, the company was asked to maintain a maximum senior secured leverage ratio of 5.90 to 1 until July 4, 2009, which thereafter declines ratably over time from 5.75 to 1 to 3.50 to 1, and a minimum interest coverage ratio of 1.10 to 1 until July 4, 2009, which thereafter increases ratably over time from 1.15 to 1 to 1.45 to 1.

Ply Gem is a Cary, S.C.-based manufacturer and marketer of products for use in the residential new construction, do-it-yourself and professional renovation markets.

Trump bonds run down

After news of an asset sale last week, Trump Entertainment's bonds ran up - only to come back down during Monday's session.

A trader said the 8½% notes due 2015 opened at 66.75 bid, 67.75 offered, only to end the day a point lower at 65.5 bid, 66.5 offered.

Another trader called the bonds down just half a point at 67 bid, 67.5 offered. Another source said he saw the bonds open unchanged around the 68 level, though by the close of business, they had fallen 2.5 points to 65 bid, 65.5 offered.

The trader said he was not sure what prompted the move but speculated that as Trump had "never really committed to what they are going to do with the cash" from the sale, "maybe they ran up too fast too soon without any follow up good news."

"Maybe people are just taking advantage of the run," he added.

News came out Thursday announcing that Coastal Marina LLC would purchase Trump Marina Hotel and Casino for more than $300 million. The new owners plan to rebrand the destination as Margaritaville.

Trump Entertainment is an Atlantic City, N.J.-based hotel and casino operator.

Among other names in the gaming arena, Harrah's Operating's 10¾% notes due 2016 were seen unchanged in the 87 level.

GMAC slips on mistaken Cerberus report

Struggling mortgage lender GMAC saw its bonds slip "ever so slightly" Monday after reports that Cerberus Capital had cut its stake in the company.

A trader quoted Mac's benchmark 8% notes due 2031 at 73.5 bid, 74.5 offered. He also saw the 5.85% notes due 2009 at 98 bid, 99 offered, the 5 5/8% notes due 2009 at 96 bid, 96.5 offered and the 6 7/8% notes due 2012 at 78.75 bid, 79.25 offered.

"That's down ever so slightly, but so was most of junk land," the trader said. "So I would say [it was not] significant."

He noted that there were a lot of quotes in the name but "not a lot of trading."

Another source saw the 8% notes at 74.75 bid, down a quarter of a point. Elsewhere, the 6 7/8% notes slipped 1 point to 79.5 bid.

According to a Financial Times article, Cerberus had cut its controlling stake in both GMAC and automaker Chrysler. However, Cerberus released a statement later in the day refuting that article.

"Cerberus has not reduced or made any changes to its equity stakes in GMAC or Chrysler since the closing of either transaction," the firm said. "Cerberus continues to have voting control over both investments."

GMAC is a Detroit-based lending company.

Sara Rosenberg contributed to this article.

© 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.