F+W Publications' bank debt is bouncing around as investors await a second call with investors, expected sometime this month, to discuss IT problems that have tripped up the company. F+W's second lien is down about 10 points from where it was before the company revealed its problems in a call Oct. 28. The "B" term loan is down about three points.
The company said during the first call that it was having problems with a new inventory management system, but was still shipping inventory. It did not ask for an amendment to the loan during that call. ABRY Partners bought F+W from Providence Equity Partners for $500 million in July. Peggy Koening, a partner at ABRY, declined comment when asked on the call if ABRY was considering legal action against Providence. The JPMorgan and Credit Suisse First Boston deal consists of a $50 million revolver, a $250 million first lien and a $100 million second lien. Bank officials did not comment by press time.
About $50 million of the company's bank debt has changed hands since it first alerted investors of the IT problem. The company's second lien opened trading last Friday at 86.50-92.50, according to Markit, a drop from 101-102 at close Oct. 26 before a memo was sent from the company saying it might breach covenants. The next day the second lien dropped as much as 10 points, down to 85-95, but tightened to 85-93 at the close of trading. Following the call the loan traded up to 92.75-94.75 but then dropped from 93.75-95.20 to 86.00-92.00 Nov. 2.
The term loan "B" closed at 100.875-101.375 Oct. 26, according to Markit, but dropped to 97.625-99.375 and bounced around before settling at 96.250-98.50 at opening Nov. 4. "The business hasn't shut down, which is probably why the first and second lien are still bid up, but there is still more information lenders are seeking," said one investor. The company has interest payments due this week.
