Spansion's $400 million term loan broke at 100 3/8-5/8 last week. There was modest trading activity on the break, said a dealer. The Bank of America-led credit also includes a $175 million asset-based revolver. The Sunnyvale, Calif.-based technology services provider is using the proceeds primarily to buy manufacturing equipment at its factory in Japan.
A buyside trader said the ABL revolver is the tricky part of the credit because of its first lien on certain assets of the company. But he said the existence of an ABL revolver above the term loan has not harmed its performance in the secondary. "Just because there is an ABL doesn't mean it won't trade well. But we are conscious that the loan is junior to the ABL."
Standard & Poor's assigned a B+ and a high 80% - 100% expected recovery rating to the term loan. Moody's Investors Service assigned a Ba3 rating. S&P said Spansion operates in an aggressively competitive, cyclical market, which is reflected in its rating. Intel Corp., STMicroelectronics and Samsung Electronics are three large competitors that have greater financial and manufacturing resources than Spansion's, said S&P in a report. The term loan has a first-priority security interest in capital stock of the company's domestic subsidiaries and 65% of the stock of its foreign subsidiaries. This excludes its Japanese assets and those securing the revolving credit facility. A call to a Spansion spokeswoman was not returned.