Search results for

Watts Industries refinanced its existing revolver a year before its March 2003 maturity to seize the opportunity to consolidate its outstanding U.S. and European loans and address near-term maturities. A E29 million piece of an ABN Amro and Intesa Bci-led E41.5 million multi-tranche credit was set to mature in March of this year. That debt and a FleetBoston Financial-led $100 million revolver helped fund the company's acquisitions. The new credit rolls both the $100 million domestic revolver and the E41.5 million European credit facility into one $150 million, three-year revolver led again by Fleet. "We felt it was easier to have one much larger line of credit," said William McCartney, cfo of Watts, adding, "I also have financing needs that needed to be addressed in Europe so I tied those in with the revolver."

This might turn out to be the most important issuance week of the year so far. In addition to the biggest corporate bond deal of the year (Weyerhaeuser's $5.5 billion multi-tranche offering), two of the most beleaguered names in the corporate bond market-Qwest and Sprint-accessed the market for $1.5 billion and $2.0 billion, respectively. (As of the time of this writing, the Sprint deal had yet to be priced so it is unclear whether the transaction will remain at $2.0 billion or increase in size.) The fact that these two companies could access the market in deals that were reportedly well oversubscribed has taken much of the fear of liquidity risk that has been hyped up in the financial press out of the market. While there are still important challenges ahead for these and the other high flyers of the 1990s, there is clearly also money available to these companies at a price. Total investment grade issuance for the week was $18.8 billion (not including Sprint), a 50% increase over the prior week. The emerging markets calendar was also very active, with Malaysia, Philippines and Brazil all pricing new deals that were increased in size from the original announcement.

Buyout firm WL Ross & Co. is in talks with lenders for a $150 million bank loan to partially fund its $325 million bid for the steelmaking assets of bankrupt LTV. Wilbur Ross, head of the firm, said a decision on the bank would be made within a week based on the interest rate, business conditions and the ratios banks are willing to work with. He declined to name the banks in with a shot of funding the deal. The acquisition, which calls for $125 million in cash and the assumption of $200 million in environmental liabilities, is being funded with $80 million of equity, while LTV's financial adviser is The Blackstone Group.

Last week was a strong one for high-yield, as even the beleaguered wireline telecom sector bounced significantly after testing new lows a week earlier. Here is other notable action:

Huntsman ICI's term loan "A" traded up from 96 to 97 3/4 last week as market players reacted to rumors that a $200 million bond deal for the company is in the works. As first reported on LMW's Web site last week, traders believe the company will use proceeds from a bond deal to pay down part of the bank debt. An estimated $5-10 million of the paper changed hands, with institutional players driving the trades, dealers said. Trading slowed by the end of last week as dealers looked to get official confirmation of the deal.

Borrowers that were once thought impervious to funding risk are now being asked to pay a premium for term-out options on deals in the aftermath of a number of high-profile fallen angels that blindsided the banks with credit issues. Gannett and AT&T are paying 20 basis points and 25 basis points, respectively, for the inclusion of one-year term out options in their new credit facilities. International Paper is paying 25 basis points at the current rating and 50 basis points if downgraded to BBB-. "Lots of deals had term-out features in the past, but arrangers are thinking more closely about adding a premium, in light of Enron, Qwest and others," said a banker.

Kmart's $2 billion debtor-in-possession facility jumped into the market last week as $25-35 million traded in the 101 3/4-101 1/4 range. Dealers said J.P. Morgan was selling and that both street and institutional players were among the buyers. A J.P. Morgan spokesman declined to comment. One trader attributed the popularity of the paper to the asset-based nature and attractive coupon on the deal. "It's a no brainer," he said. J.P. Morgan, Fleet Retail Finance, Credit Suisse First Boston and General Electric Capital Corp. lead the deal, which includes a $200 million institutional piece. The name's original $1.5 billion credit facility took a back seat to its younger cousin. Dealers said the name traded scarcely in the mid-60s. Calls to John McDonald, executive v.p. and cfo of Kmart, were referred to a spokesman, who did not return calls by press time.

Three managers of a distressed debt fund at Lazard Frères left the firm last week for the Quadrangle Group, a New York-based $1.1 billion private equity firm run by Steven Rattner, the high-profile former Lazard deputy chairman. Lazard will cease operation of the fund, according to Joele Frank, an outside spokeswoman. "As a result of these abrupt departures, we have concluded that the best interests of investors require that we begin an orderly winding down of the fund," she said.

Lehman Brothers is establishing a London-based European asset-backed research team. Krishna Prasad, who has been covering U.S. ABS in New York for five years, will be heading the team and plans to add two or three analysts. He says it has not been decided if the new additions will be internal or external hires. Previously, Lehman had been covering European ABS from the U.S., but Prasad says that the business has grown to a size where it merits its own research effort on the ground. Prasad, who had been covering European ABS from New York, in addition to his U.S. coverage, will assume his new role this week.

Mishawaka, Ind.-based National Steel has been provided in principle with a $450 million debtor-in-possession facility by a group of lenders after filing for Chapter 11. Terry Fahn, a spokesman for National Steel, said Citibank, CIT Group, Heller Financial, Fleet Capital, GMAC and Fuji Bank are among the lending group. The banks are part of the pre-petition facility, he added. Hisashi Tanaka, chairman and ceo, said in a statement that the "historically low steel prices and a weak economy impeded the company's ability to service its debt and make investments in the business necessary for continued growth."

On the run names Adelphia Communications, Charter Communications, and Nextel Communications firmed up last week on positive market sentiment echoing reports of economic growth and stronger equity and bond markets. Adelphia's term loan "B" ticked up from a 99 1/2 street trade two weeks ago as $5-10 million traded in the 99 1/8 to 99 7/8 range. Roughly $10 million of Charter's "B" term loan traded in the 97 3/8-97 5/8 range compared to the 96 1/2 level three weeks ago. And Nextel's bank debt also perked up as $60 million traded up to the 86 range with $2.5 million pieces trading at 85 1/8 and 85 5/8 by Wednesday last week.

Royal Bank of Scotland Financial Markets is seeking to hire a salesman to focus on selling interest-rate and foreign exchange risk management products to its corporate clients in the Midlands region of England. The hire would tailor instruments such as interest-rate and fx swaps as well as other risk management tools for corporate treasury departments in and around the Birmingham area, which is where the hire will be based, according to an official.