Delphi Corp.'s six-year, $1 billion term loan stormed upwards on the break and traded as high as 102 3/4-103 1/8. The tranche was syndicated by JPMorgan and Citigroup and was largely placed with hedge funds at 99 1/2. The loan is priced at LIBOR plus 6 1/2% and is non-call in the first year and 102, 101 soft-call for the following two years.
The banks also arranged a $1.8 billion revolver. This rolled $300 million from the previous $1.5 billion 364-day revolver into the $1.5 billion five-year revolver. The revolver is priced at LIBOR plus 5% and has a 50 basis points commitment fee on the unused portion.
The refinancing plan was critical in enabling Delphi to deal with U.S. legacy costs issues during the current low GM production environment. Delphi has also contributed $475 million to its U.S. pension plans, fulfilling minimum funding requirements for 2005.
The deal was an eventful syndication. Two weeks ago the company announced that its treasurer and its former v.p. of treasury, mergers and acquisitions had resigned as the company admitted it had overstated its liquidity. Despite the company's problems, one banker explained the appeal for hedge funds. The deal is secured, it's well priced and the investors are not exposed to interest-rate risk, he said.