Consolidated Container, a plastic container manufacturer, was working to amend its credit facility to push out amortization payments on its term loans for two years as LMW went to press last week. According to buysiders and dealers, the amendment would be passed. "It's just a cash flow situation. In order to meet the covenants and perform, they had to mothball the amortization payments," noted one dealer, adding, "It's a two-year deferral and it's supposed to be a permanent solution." The company needs 51% lender approval by tranche to pass any changes to its amortization schedule and also 51% to pass any covenant changes, noted one buysider.
Levels for the paper have been trickling down from the low 90s over the last month. Traders said a small piece of the pro rata changed hands in the 83-85 context and the "B" loan is believed to have traded in the 85-87 range. On Dec. 20, Consolidated Container won approval from lenders to extend its amortization payments from Dec. 31. to Jan. 7. The date was later moved to Jan. 10.
As of Sept. 30, Consolidated Container had a term loan "A" with $97.5 million outstanding, a $33.5 million converted term loan that was carved out of the company's revolver, and a tranche "B" with $229.1 million outstanding. The "A" term loan and the converted term loan have quarterly amortization payments and the "B" term loan must be repaid in 1% installments. John Woodard, a managing director of Vestar Capital Partners, which owns a controlling stake in Consolidated Container, declined to comment on the situation noting the ongoing negotiations. Tyler Woolson, Consolidated Container cfo, did not return calls by press time.