Search results for

Energy names weakened in the secondary loan market last week under pressure from Calpine Corp.'s new $750 million CCFC1 credit. AES Corp.'s recently completed deal traded off into the 983/4 991/2 context and Allegheny Energy's second-lien loan traded down into the 92- 94 range from the 95-96 context where it was moving last month. "The market ran way too far ahead of itself," noted one trader

Federal bank regulators are preparing to set banks straight on the issue of linking commercial loans to investment-banking business, or loan tying. There is a growing conviction at the Federal Reserve and the Office of the Comptroller that guidance to the nation's biggest banks is needed, a Fed spokesman confirmed last week, and it is now a question of how quickly it will happen. The core issue is just what Section 106 of the Bank Holding Company Act will let banks do. Outside sources were predicting that the guidance will hone in on where that line is to be drawn in future. The banks point out that at present, Section 106 does not ban tying if it is voluntarily entered into. And they argue the law says only if banks exact some "condition or requirement" for getting the loan (beyond routine banking services such as deposits) is tying illegal.

GEO Specialty Chemicals is waiting on approval from its senior lenders for a loan commitment that would help it avoid defaulting on a senior notes payment. Deutsche Bank and Citigroup lead GEO's existing $125 million credit, which includes a $105 million term loan priced at LIBOR plus 6%. GEO was in violation of credit facility covenants as of last June 30 and it missed an interest payment on its notes on Aug. 1. Now, the company is looking for approval of a new loan, which has been committed, so it can make the interest payment within a 30-day grace period. If GEO does not make the payment--$6.1 million--within the grace period, it will be in an event of default under a governing indenture.

The Official Committee of Unsecured Creditors to Exide Technologies has filed a motion to stay the proceedings on the company's plan of reorganization and disclosure statement. But levels for the loan only softened to the 59-611/3 context, according to LoanX. Mid July, the levels had risen to the 63-64 range following the filing of the company's plan of reorganization (LMW, 7/21). The bulk of the equity of a reorganized Exide is slated to go to bank debt holders.

San Jose, Calif.-based Calpine has incorporated a spark-spread hedge into a $750 million power plant refinancing package, a feature that ensures debt interest will be paid even if generation margins deteriorate for the gas-fired generation portfolio, according to sister publication Power, Finance & Risk. Bankers said the power plant financing is likely the first of its type to strip out commodity price risk through the use of a spark-spread floor.

Market players were aghast last week over talk about Del Monte Foods' plan to refinance its $1.245 billion credit without shelling out the call protection premiums attached to the deal. The credit's $750 million "B" loan has call protection 102 in the first year of maturity and call protection 101 in the second year. But an investor explained that the new term loan could be fashioned as an identical "C" loan and the paydown of the "B" piece will be classified as a mandatory pre-payment, as opposed to a non-mandatory prepayment that would trip call protection fees. "If they have a non-mandatory prepayment, they pay two points and if they have a mandatory payment they pay par," he explained. A Del Monte spokeswoman said the company is considering its refinancing alternatives but it has not made a final decision yet. She declined to comment further.

A high-profile group of junk bond veterans has raised $100 million and will enter the market Sept. 1 with a hedge fund that will take long and short positions in high-yield bonds and leveraged loans, according to LMW sister publication Bond Week. The managing partners of the fund, called Chatham Asset Management, are Larry Buchalter and Anthony Melchiorre. They both declined comment when reached at their Chatham, N.J., offices.

Deutsche Bank will be shopping a five-year, $230 million credit facility for Magellan Health Services sometime after the Labor Day holiday. The credit will be effective upon Magellan's exit from bankruptcy, expected to take place next month. The facility will include a $100 million "B" loan, an $80 million synthetic term loan and a $50 million revolver, said a banker familiar with the deal. He did not comment on price talk and a Magellan spokeswoman said more pricing details are expected to emerge in filings released this week.

Mellon Financial Corp. subsidiary Mellon HBV Alternative Strategies has added a long-only distressed investment discipline. The fund will aim to acquire influential or controlling positions in various securities of distressed public companies, targeting the general industrial, manufacturing, services, tech, telecom and retailing sectors, according to James Jenkins, managing director and distressed portfolio manager at Mellon HBV. The fund will target bank debt or bonds trading at significant discounts and will seek to actively participate in the restructuring process of these companies, a spokesman said. He declined to comment on the size of the fund.

The $176 million term loan and $25 million second-lien loan backing The Cypress Group's $433 million acquisition of J.W. Childs-owned The Meow Mix Company is oversubscribed and lead banks are accepting more tickets for the $231 million credit through this Wednesday, a banker said. UBS and CIBC World Markets are shopping the credit along with a $30 million revolver. Pricing is at LIBOR plus 31/2% on the first-lien debt, while the second-lien piece is priced at LIBOR plus 61/2%, the banker confirmed. A UBS official declined to comment and a CIBC banker could not be reached.

Ricardo Pascoe, global head of foreign exchange, alternative investment strategies and proprietary trading at Commerzbank Securities, and managing director of the London office, has resigned. Pascoe resigned for personal reasons, according to Neil Brazil, spokesman in London. Pascoe was traveling and could not be reached.

China