A $25 million piece of USG Corporation's bank debt traded last week, with some dealers early in the week pointing to Bank of Tokyo-Mitsubishi as the seller. Dealers later noted that BTM officials had been asking around about the name to determine levels but did not move any paper. A BTM official remarked, "It's a rumor. Let's leave it that way." Levels were reported at around 60 and dealers attributed the shuffling of the $25 million piece to nervousness about the company's asbestos litigation. USG, based in Chicago, Ill., makes gypsum wallboard and sheet rock.
Last week the company issued a press release that stated it was considering all its options to manage significant liability growth. Two years ago the company had $100 million in liability; today it faces $275 million. "What's happening is we're paying for liability of other companies," a company spokesman said. "As they file, we're left with it, which is what happens when you're the strongest company and the last guy standing. This can't go on forever, so between a new bank deal and legislation, we're considering our options."
Dealers said the company also has a short-term deal that expires at the end of the month. "People are worried about the company's ability to refinance," a trader remarked. He noted that fears of a Chapter 11 bankruptcy filing are such that trading was halted briefly on Friday. When the company didn't file, trading of its stock resumed. The company filed for Chapter 11 a decade ago but later emerged. Its position as a leading construction materials provider has kept the company afloat, say market watchers.
The company has a $600 million deal that breaks down into two tranches. J.P. Morgan, Bank of America, Bank One, and Citibank are the lead arrangers, according to Capital DATA Loanware.