A struggle between lenders to Owens-Illinois and bondholders who have taken a position in the company's bank debt is holding up a credit restructuring and prompting traders to take bets on the outcome. Dealers said $20 million had traded in the 90 range and was quoted at 89-91 in the Street, as par desks started to slide down market to get into the action.
The company is offering to give collateral to all the arrangers and raising the coupon in exchange for extended maturity. "They're waiting to get approval [on the extension]. The banks will get security interest in return," a trader said. The company, based in Toledo, Ohio, is one of the largest glass manufacturers. A company spokesman did not return calls for comment.
Pricing had been previously announced at LIBOR plus 21/2 %, and there was speculation that there would be a further uptick in pricing. The changes were supposed to be made in mid-March. "They did not get approval. The bond holders are trying to hold it up because they don't want the banks to get ahead of them," said a trader familiar with the process. "The [renewal] will probably close soon, but I doubt it will with the structure they have now."
While levels for asbestos-related names had plummeted late last year, a more active market and debt restructuring for some companies has helped these names inch back up. Dealers say Owens-Illinois has managed to overcome its asbestos ties better than the other names because of a strong business. However, one dealer was skeptical that the company would get an extension on its maturity. "It's not getting done," he predicted. "No deal has been consummated." The company has a $7 billion credit facility which breaks down into two tranches. Pricing is LIBOR plus 1%. Deutsche Bank, Bank of Nova Scotia, Bank of America are the lead arrangers, according to Capital DATA Loanware.