JPMorgan and Citigroup are leading an amended and increased facility for Delphi Corp., the world's largest maker of auto parts. The loan includes a four-year, $2 billion revolver and a six-year, $750 million term loan "B." The term loan "B" is priced at LIBOR plus 5 1/2%. Pricing on the revolver is set on a grid with a spread between LIBOR plus 3% and LIBOR plus 4 1/2%. The deal launched last Monday and the company expects it to close in early June.Standard & Poor's assigned a BB- rating to the new credit. It also assigned a B-3 short-term rating to the company, noting that it thinks Delphi will be reliant on external liquidity to meet near-term obligations.
"The goal or purpose of securing this refinancing is to provide us with flexibility and liquidity to manage ongoing business," a spokeswoman for Delphi stated. She said the company has not indicated what it will use the funds for. "We are looking to maintain the same level of liquidity in this uncertain environment," she said, citing challenges facing the auto industry. Delphi did not draw upon its previous facility which consisted of a one-year, $1.5 billion revolver set to expire this June and a five-year, $1.5 billion revolver.
JPMorgan and Citigroup have historically been the leads for Delphi facilities and are the company's largest lenders. "We're very comfortable using them," the spokeswoman said. The company had $28.7 billion in revenues last year. It did not file its 10K and is currently preparing restated financial statements for audit and review by independent auditor, Deloitte & Touche, a Securities and Exchange Commission filing stated.
S&P cut the company's corporate credit to B+ from BB and its senior unsecured rating on the company to B- from BB. The ratings agency said the ratings are a result of weak earnings and cash flow generation caused by various industry conditions, especially for its largest customer, General Motors Corp.