Chemical Co. Loan Recovers

  • 05 Jan 2003
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OM Group's term loan "C" has ticked up roughly seven points over the last month as the company completed an amendment to its credit facility and announced restructuring initiatives. The "C" loan is currently quoted with a bid/ask spread of 90 1/3 to 92 2/3, compared with a spread of 83 to 85 1/2 at the beginning of December, according to LoanX. "Anyone who bought [the paper] in the low 80s is patting themselves on the back right now," one trader commented. The bank debt plummeted roughly about 18 points into the mid-70s at the end of October after the Cleveland-based specialty chemicals maker posted poor results (LMW, 11/4).

The recent amendment to the credit facility required OM to term out $100 million of its $325 million revolver, explained Tom Miklich, OM's cfo, during a conference call discussing the amendment. Pricing on the revolver increased from LIBOR plus 3% to LIBOR plus 5%. Pricing on OM's $600 million "C" tranche also increased from LIBOR plus 21/ 2% to LIBOR plus 5%. In addition, a LIBOR floor of 13/ 4% was put in place. As further protection for investors, pricing on the bank debt will increase in March, July and every quarter thereafter if the company does not meet certain asset sale targets.

In conjunction with the amendment, OM received relief on its existing covenants until 2004, but a senior debt-to-EBITDA covenant was put in place. Calls to Greg Griffith, director of investor relations for OM, were not returned.

  • 05 Jan 2003

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2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

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5 Credit Suisse 51,313.00 155 5.49%