Intermet Corp.'s $120 million "B" loan and $90 million revolver ticked up a few points to the 93-95 range after the company filed for bankruptcy. A trader attributed the uptick to expectations of a refinancing that will take the debt out at par. Last month the levels dropped to the upper 80s after Intermet said it expected to be in default of leverage and interest covenants by the end of September, before recovering to the low 90s. The $175 million of 9 3/4% bonds fell though from 40 to 35, according to Mark-It Partners/LoanX.
Intermet is in the process of negotiating a $50 million debtor-in-possession facility. The talk in the market is that Scotia Capital, the current lead bank, will provide this financing, but the company is still reviewing commitments. An Intermet spokesman and a Scotia banker did not return calls.
Intermet said the filing is in response to the unprecedented rise in scrap steel prices to $395 per ton. Last week Kelso & Co. portfolio company Citation Corp. also filed for bankruptcy citing the soaring prices in scrap steel which Joseph von Meister, senior analyst of distressed and special situations at Jefferies & Co., described as "unbelievably high" (LMW, 9/27). Other auto-parts companies such as Metaldyne and Tower Automotive have also seen their businesses suffer, but not to the same extent.
According to Bloomberg, other banks on Intermet's revolver include Deutsche Bank, Fifth Third Bank and Comerica Bank. Bloomberg also cites lenders on the term loan at the time of signing last January as American Express Asset Management, Angelo Gordon & Co., The Alcentra Group, The Blackstone Group, Callidus Capital Management, Highland Capital Management and Stanfield Capital Management. Intermet's revolver is priced at LIBOR plus 3 3/4% and the "B" loan is priced at LIBOR plus 4 1/4%.