JPMorgan leads all debtor-in-possession financing for 2005, with 35% market share, according to data collected by Dealogic. The bank has lent about $3.6 billion in DIP financing to companies including Collins & Aikman and Tower Automotive. Citigroup is second with 24% market share and GE Commercial Finance is third. Citigroup finished 2004 at the top of DIP lending league tables, with JPMorgan in second. To date, banks have doled out about $9.2 billion in DIP financing, as compared with $6.3 billion for all of 2004 (for charts, see CIN's Web site). The average margin for DIP loans this year is about LIBOR plus 412 basis points, just one point lower than the LIBOR plus 413 basis points average spread last year.
The auto and airline sectors have been the most in need in 2005. The auto/truck industry has received about $1.6 billion in DIP financing so far and the airline industry has received about $3 billion. In 2004, the airline sector received about $1.5 billion in DIP loans.
Delta Air Lines' DIP from GE Commercial Finance two weeks ago helped move the firm into the third position. The deal consists of a $600 million term loan "A" priced at LIBOR plus 5%, a $600 million term loan "B" priced at LIBOR plus 7% and a $500 million term loan "C" priced at LIBOR plus 9%. Morgan Stanley is a co-arranger on the term loan "C." American Express has also agreed to provide the airline with an additional $350 million of secured financing, which will be secured by liens junior to the DIP (CIN, 9/16).
In July, JPMorgan brought a $150 million DIP for Collins & Aikman to the market. The facility consists of a $25 million revolver and a $125 million term loan with pricing of LIBOR plus 3% on both tranches. The bank had initially planed to fund $300 million in DIP financing but then dropped its commitment to $150 million. Instead the company is receiving $82.5 million in subordinated DIP financing and $82.5 million in aggregate price increases under certain existing customer contracts (LMW, 7/29).