Lear Corp.'s repriced $1 billion term loan traded down to 100 1/2 last week after breaking at 101. The term loan was flexed down a further 25 basis points to LIBOR plus 2 1/2% just before the break. A trader said a variety of investors bought into the deal, adding that the paper was in demand despite the price decreasing. "It still has a pretty good coupon," he said. JPMorgan and Citigroup lead the deal, which Lear will use to refinance debt.
The deal has been reworked several times since it first came to market in early April. It was originally structured as a $600 million term loan "B" and a $200 million second lien. Because of investor demand, the company eliminated the more expensive second lien and increased the "B" loan by $200 million. Initial price talk on the first lien was LIBOR plus 3% and LIBOR plus 4 1/2%-4 3/4% on the second lien (CIN 4/21).
The new credit facility will be used to pay back Lear's 2007 debt maturities as well as a portion of notes maturing in 2008 and 2009. Moody's Investors Service assigned a B2 rating to the term loan. The bank debt is backed by guarantees from Lear's main subsidiaries as well as shareholdings of certain subsidiaries. A Lear spokesman did not return calls.