Despite the announcement that Fleming Companies and Kmart had terminated their supply agreement, bank debt levels for Fleming's "B" term loan have remained high. Traders quoted the "B" in the 97 3/4 - 99 1/4 context due to the possibility that the company's term loan will be taken out within the next three months either through asset sales or through a new asset-based facility. The company has $325 million of term loan outstanding. Mark Shapiro, Fleming cfo, could not be reached by press time.
AES Corp.'s bank debt benefited from the sale of its utility holding company Cilcorp to Ameren Corporation for $1.4 billion. From the transaction, AES received roughly $500 million in net equity, $250 million of which was used to pay down the company's bank debt. The market for the company's "A" piece was quoted in the 97-98 context and company's "B" and "C" tranches were said to be trading in the 94-95 1/2 range. While the amount was distributed on a pro rata basis, the "A" term loan received a larger distribution because it had $850 million in claims because it derived from the company's former $850 million revolver. A spokesman for the company confirmed the pay down.
Aurora Foods bank debt has been stronger this week, with market players quoting the term loan in the 90-91 context up from the high 80s. Reports indicate that the company is getting close to selling off some of its frozen foods businesses. Aurora hired J.P. Morgan and Merrill Lynch last summer to aid its divestitures. One dealer noted that the company had received an equity injection last summer but has been burning through cash ever since. Calls to financial officials were referred to a spokesman, who confirmed that the divestitures are scheduled for the early part of this year.
Federal-Mogul bank debt, meanwhile, was trading actively after the company announced that it has reached an agreement in principle in regards to a reorganization plan. The bank debt was quoted in the 74-75 1/2 level up from the high 60s where it was trading last week. "People think that there is upside at these levels," noted one dealer. Under the reorganization plan, lenders owning $1.6 billion in bank debt will receive a portion of a new senior secured term loan and 11-year junior secured payment-in-kind notes. Calls to Michael Lynch, Federal-Mogul cfo, were referred to a spokeswoman, who did not return calls by press time.