The recently issued bank debt from International Steel Group (ISG) slumped slightly in the secondary loan market after the company reported weaker numbers to investors. The bank debt, which had been trading in the 1001/4 1003/8 context, dipped under par and was quoted in the 981/2 993/4 range by the end of last week. Leonard Anthony, ISG cfo, said results had softened due to factors that affected the steel industry as a whole. He declined to provide specifics, noting that the company is currently pursuing an initial public offering. "Everyone in that space saw those kind of results relative to expectations," noted one buysider.
Going forward, Anthony noted the outlook for the steel industry is improving compared to the performance over the last couple of months. He suggested the firming equity market also provides investors with comfort that the company will be able to complete a successful IPO. ISG's credit agreement requires the company to use all the net proceeds from the stock offering to repay the outstanding amount on its "A" term loan. If the proceeds from the offering exceed the amount on the "A" piece, 50% of the excess will be directed to repay ISG's "B" loan. Goldman Sachs, UBS and CIT Group led ISG's new $1 billion loan last spring. The credit comprises a $300 million revolver, a $300 million "A" loan and a $400 million "B" piece (LMW, 4/7).