AES Corp. bank debt got a slight boost from the news that the company has reached agreements to conduct three asset sales that will provide approximately $327 million in proceeds. The company's "B" piece was quoted in the 97 3/4-98 1/2 context, up from the 96 1/2 -97 1/2 range after the news. AES has already received cash proceeds of $25 million from the sale of its Mountainview Power equity interest. It will receive another $5 million on April 15 and $20 million if certain project milestones are achieved. The other two transactions are expected to close by the end of the third quarter, if not before. AES will apply 80% of the proceeds from these latest asset sales to its senior bank and bond debt on a pro rata basis, explained Ahmed Pasha, AES' investor relations spokesperson.
Kmart's bank debt has been trading as the company nears its exit from bankruptcy. Early in the week more than $10 million of the company's three-year revolver was sold in a mini-auction out of an original lender north of the 40 level. Although the company's reorganization plan will distribute 40 cents on the dollar to lenders for their exposure, dealers explained that the paper was able to trade higher than 40 because buyers receive net backs for letters of credit. The three-year loan is therefore priced at a 125 basis point premium to the 364-day revolver, which is changing hands in the 38 1/4 -39 range. GE Commercial Finance, Bank of America and Fleet Retail Finance are currently gathering commitments for Kmart's $2 billion exit financing, which mirrors the bankrupt retailer's debtor-in-possession facility. Kmart officials could not be reached by press time.
Fleming Companies' term loan "B" slumped back down with pieces trading in the low to mid 80s. The company was said to have hosted a bank meeting last Friday that was not as optimistic as the company's bank call the week before. Fleming's 10 1/8% notes also fell from the high 40s context where the paper traded at the beginning of last week into the low 30s. The company has a $17.7 million coupon payment due on April 1, but market players are mixed on whether or not the company will make the payment. Calls to Mark Shapiro, senior v.p. of finance and operations control, were not returned by press time.