Sonic Term Loan Breaks
Sonic Corp.'s $675 million term loan "B" broke at 100 1/4-100 1/2 in the secondary market today. A dealer said trading was fairly active on the loan, which Sonic, a drive-in restaurant chain, will use to purchase shares of its common stock and refinance some of its existing debt. Bank of America and Lehman Brothers lead the financing, which also includes a $100 million revolver. The term loan "B" is priced at LIBOR plus 2%; price talk was originally LIBOR plus 2-2 1/4% (CIN, 8/18).
Schefenacker Bonds Continue to Plunge
Schefenacker's 9 1/2% '14 notes fell to the 46-47 context from the low 60s. A trader said investors are quickly losing confidence in the company after it announced in a conference call a few weeks ago that it would miss its EBIDTA forecasts. Investors are concerned the company may trip covenants in its loan agreements, which would trigger a default on other debt. The German auto supplier's bonds fell eight points to 81-82 three weeks ago after it posted a EUR10.6 million net loss in the second quarter (CIN, 8/21). The net loss was partly driven by a delay in cost reductions related to its restructuring. A Schefenacker spokesman did not return a call seeking comment.
Teksid Bonds Fall
The troubles at German auto supplier Schefenacker had a knock-on effect on Italian-based auto supplier, Teksid Aluminum, which has seen its bonds fall 10 points over the past couple of weeks. A trader said the problems at Schefenacker is driving investors to reassess their portfolios in auto other suppliers. He cited Teksid as a company that has seen its debt fall in tandem with Schefenacker's as investors' concerns over the future of the European auto supply sector continues to deepen.
Teksid's 11 3/8% '11 bonds fell 3 points to 64-67 range, rounding off a 10 points drop over the past three weeks. Teksid, which has a similar business profile to Schefenacker, makes aluminum engine castings for the auto industry. "People are getting nervous about auto parts in general. Hedge funds are reviewing what is in their portfolio. They are taking a more reasonable view of the value of these companies' bonds," said a trader. A call to Massimiliano Chiara, finance director, was not returned.