Crown Cork & Seal's bank debt traded flat at 87 last week with $20 million changing hands on continued belief that the company will have to refinance its debt. Dealers believe the company plans to take out its 2002 maturing debt, which includes $350 million in bond debt and the outstanding amount on a $400 million term loan. It will then need to refinance an additional $2.2 billion dollars in bank debt, which expires in December 2003, before it begins to deal with $400 million of bonds also maturing in December 2003. Rumors suggest that any refinancing plan would be structured such that bank debt holders are backed by a first lien on the company's assets and bond holders would be backed by a second lien on the company's assets. This security would place bank and bond creditors above asbestos liabilities in case of default, one banker explained.
Market players became interested in the name after seeing a 10 point spread between its bonds maturing in September 2002 and its bonds maturing in December 2003 versus a lack of movement in the bank debt. Calls to Timothy Donahue, company senior v.p. of finance, were not returned by press time.