A potential takeover of Meridian Automotive Systems by a financial sponsor and another auto parts company is driving trading in the company's $165 million second lien. The debt was offered at 76 yesterday but traded between 83 1/2 -85 1/2, according to traders. "There was talk of a takeover," said one distressed trader, who added that a meeting is slated for this week.
There are well documented problems in the auto parts sector. But a different distressed trader said the price is right and there is value in the company. "If you look at the business there's real long-term value. It has great platforms," he added. Officials at the company did not return calls by press time.
Meridian's second-lien is priced at LIBOR plus 9%. The company also a $230 million first lien tranche priced at LIBOR plus 4 1/2%. The first-lien is quoted close to par. Credit Suisse First Boston leads the bank debt.