Lenders Give Amending Borrowers Cold Shoulder

  • 23 Feb 2003
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Two companies seeking amendments to their credits were slogging through the market last week, as lenders held out for better pricing and a larger piece of the proceeds on asset sales. Early in the week, votes were due on amendments for both Broadwing and Wyndham International, but when LMW went to press the negotiations were still continuing.

For Broadwing, one of the main obstacles to completing the amendment is obtaining the requisite 100% approval from the banks holding the company's revolver. Broadwing wants to extend the maturity on the revolver by 16 months from November 2004 to March 2006. In exchange, pricing on the revolver originally was to be increased to LIBOR plus 4%, (LMW, 2/3). Thomas Osha, Broadwing spokesperson, confirmed that the process is still continuing, but he declined to comment on the ongoing negotiations. Bank of America is the syndication agent on the credit and Citigroup is administration agent. Credit Suisse First Boston and Bank of New York are co-documentation agents.

Although the maturity on Broadwing's "B" and "C" pieces would not change, lenders looking to mark the deal to market want more juice to accommodate them for their cooperation. Those tranches do not need 100% approval, but one holder of the loan joked that the term loan holders were going to don masks and hold-up the company for more pricing. He said lenders wanted the paper to yield in the high-single digits. One buysider concurred, saying that lenders want pricing to match the company's B- rating. "If you have to carry [the B- rated paper] and you're pricing is LIBOR plus 300, it really hurts you" as an investor. He also suggested that lenders have room to go because the bank loans are cheap relative to the company's $350 million of 12% junior debt sitting on the sidelines. The market for the "B" and "C" pieces remained in the mid-90s.

For Wyndham, pricing is reportedly a much smaller sticking point. "This amendment has little to do with pricing. It's about asset sales and restructuring," one dealer noted. Wyndham wants to amend its bank debt so the maturity of its revolver and increasing-rate loan pieces, which mature in June 2004, align with the June 2006 maturity of its "B" term loan (LMW, 2/17). The IRL holders, experiencing a bit of lender fatigue, are displeased with the amendment, said a wide group of market players. Initially, they were set to receive only a 25 basis point amendment fee and proceeds from incremental asset sales for the extension. Market buzz indicates that the company might need to offer the IRL holders a higher spread as well as allocate a greater amount of asset sale proceeds to the reduction of the loan. The company's term loan "B" and increasing rate loan are both already priced at LIBOR plus 4 3/4%. "I'm not sure that the company has more to give," said a trader.

The market for Wyndham's bank debt slipped roughly three points last week with the "B" loan quoted in the 72 3/4-73 3/4 context and the market for the IRLs in the 75-77 1/3 range, according to LoanX. At the end of last year, Wyndham had a $156.4 million revolver, a $447.7 million IRL and a $1.183 billion "B" piece. J.P. Morgan leads the bank deal. Calls to Rick Smith, Wyndham cfo, were referred to a spokesman who did not return calls by press time.

  • 23 Feb 2003

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,171 21 10.72
2 Bank of America Merrill Lynch (BAML) 6,901 20 10.32
3 JP Morgan 4,776 10 7.14
4 Credit Suisse 4,718 9 7.05
5 Lloyds Bank 4,420 14 6.61

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4 Citi 56,521.05 165 9.38%
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