Motor Coach Industries International's loan shot up and was trading close to par with word that a three-part refinancing plan is on the way. The refinancing package is slated to include roughly $240 million in first-lien asset-based loans via GE Capital, a $100 million second-lien term loan lead by Goldman Sachs, and a $150 million third-lien loan provided by Franklin Templeton Investment's Mutual Shares Fund. Allan Swanson, Motor Coach's cfo, and Ramsey Frank, a senior managing director at JLL Partners, Motor Coach's majority shareholder, did not return calls by press time.
The exact terms of the first-lien deal had not yet been set in stone when LMW went to press. But Goldman's second-lien loan was already in the market last week. The loan is expected to carry LIBOR plus 81/2% pricing, a 2% LIBOR floor, and will be issued at 99. The deal also has call protection of 105, 103, 101 for the first three years. Officials at GE, Goldman, and Franklin Templeton either declined comment or did not return calls by press time.
The refinancing buzz caused Motor Coach's price in the secondary market to climb more than 10 points over the last month. The loan had been quoted in the mid-80s last month when the refinancing buzz began (LMW, 2/23). All three parts of the package need to be completed for the bank debt to be taken out. One buysider reflected on the tough choices for lenders: sell out now at a discount or wait for par and risk the deal falling through. Another factor weighing on this deal's success is Standard & Poor's recent downgrade to the company's senior secured debt ratings to CCC over concerns that weak cash-flow generation could cause the company to default on its debt obligations. Motor Coach has about $520 million in debt outstanding.