socit gnrale relaunches us leveraged finance biz collins by renata.vivien1


									JANUARY 16, 2006
VOL. II, NO. 2
                                                              COLLINS & AIKMAN BONDS TUMBLE ON
                                                              SPECULATION OF J.V. BREAK-UP
Georgia/Koch Deal                                             Collins & Aikman bonds fell seven points on fears that the proposed joint venture between
Launches                                                      Lear Corp. and WL Ross & Co., which would combine Lear Corp.’s European interiors
The Georgia-Pacific/Koch Deal, which
came to market last Tuesday, contains                         business with Collins & Aikman’s European business, would fall apart. Collins & Aikman’s
the largest term loan “B” and second-                         10.75% ’06 bonds fell to 39.75.
lien tranche ever.                                               Investors’ concerns that Lear would pull out of the joint venture were sparked by an 8K
                     See story, page 3                        the company filed with the Securities and Exchange Commission in which it said it would
                                                              take an additional $342 million impairment charge in the fourth quarter of 2005 for its
                                                              interior products division (see story, page 6).
Primary Market
UAL Exit Financing Comes To Mart                         3
                                                                 During an investors’ meeting at the Detroit Automotive Conference in Dearborn, Mich.,
Deluxe Reworked                                          3                                                                          (continued on page 11)

People & Firms                                                Take Two
Leveraged Finance Vets
  Launch Lending Co.                                     4
                                                              SOCIÉTÉ GÉNÉRALE RELAUNCHES U.S. LEVERAGED
Barclays Increases Structured                                 FINANCE BIZ
  Products Team                                          5    Société Générale is ramping up a leveraged loan effort in the U.S. after more than a four-
Trading                                                       year absence and is looking to assemble a team of about 10 in the next two or three months.
Hallmark Breaks Above Par                                5    One of those hires is expected to be an established managing director from the U.S.
Visteon, Lear Trade Down                                 6    leveraged loan market, according to Rene de Laigue, global head of leveraged finance.
                                                                 The bank is looking to build a franchise in the middle market, focusing on the private
Investment Strategy                                           equity relationships the European business has developed. Guillaume Dovillers, director in
Manager Backs Off New Issue Corps. 6                          leveraged finance, was brought over from London to lead the effort. He had been working in
                                                              the U.K. and helped launch the business in the Italian markets. Additionally, Marco
Structured Credit                                                                                                                   (continued on page 12)
BMA Anticipates Increase In CDOs                         7

Charts                                                        I-GRADE CDS CATCHING FIRE AFTER
Secondary Marketplace              7
Weekly Credit Advancers/Decliners 9                           S&P CHANGES MODEL
Yield Curves                       9                          Banks are hustling to ramp up portfolios of investment-grade credit-default swaps after a
Search Directory                  10                          change in Standard & Poor’s methodology injected value into higher-rated tranches of
                                                              collateralized debt obligations. The alteration by S&P means dealers can pay higher returns
COPYRIGHT NOTICE: No part of this publication may
be copied, photocopied or duplicated in any form or by        on senior tranches, with one arranger noting a jump to 100 basis points from 40-50 bps in
any means without Institutional Investor’s prior written      December. “Higher rated portfolios now require less subordination so they can pay more
consent. Copying of this publication is in violation of the
Federal Copyright Law (17 USC 101 et seq.). Violators         spread,” a structurer told Derivatives Week, a CIN sister publication.
may be subject to criminal penalties as well as liability
for substantial monetary damages, including statutory
                                                                 S&P has decreased the assumed probability of default on investment-grade names, and
damages up to $100,000 per infringement, costs and            a report by analysts at The Royal Bank of Scotland say they expect a surge in the number
attorney’s fees. Copyright 2006 Institutional Investor,
Inc. All rights reserved. ISSN# 717-5030                      of investment-grade CDS portfolios as a result. In conjunction, the agency increased the
For information regarding subscription rates                                                                                        (continued on page 11)
and electronic licenses, please contact Dan Lalor at
(212) 224-3045.

        For breaking news throughout the week, head to—free for subscribers
Credit Investment News                                                                                                   January 16, 2006

At Press Time
White Birch Receives Funding                                                                                               EDITORIAL        PUBLISHING
Credit Suisse First Boston launched syndication of $130 million financing for                                            TOM LAMONT         ELAYNE GLICK
                                                                                                                               Editor       Publisher
White Birch Paper Co. to partially back the acquisition of the Quebec company,                                                              (212) 224-3069
                                                                                                                        STEVE MURRAY
Papier Masson Ltée. The financing consists of a seven-year, $89 million term                                              Deputy Editor     DAVID HOM
                                                                                                                                            Associate Marketing Manager
loan “B” priced at LIBOR plus 3 1/4% and a eight-year, $41 million second-lien                                       KRISTEN HAUNSS         (212) 224-3896
                                                                                                                       Managing Editor
term loan priced at LIBOR plus 7 1/2%. A spokesman for the company could                                               (212) 224-3990
                                                                                                                                            VINCENT YESENOSKY
                                                                                                                                            Senior Fulfillment Manager
not be reached.                                                                                                            KIM MOORE
                                                                                                                                Reporter    SUBSCRIPTIONS/
   Papier Masson is a low cost producer of newsprint with an annual production                                          (212) 224-3277      ELECTRONIC LICENSES
capacity of about 234,000 tons on one paper machine. White Birch is one of the                                       SEAN O’LOUGHLIN
                                                                                                                                            One year - $2,475 (in Canada add $30
                                                                                                                                            postage, others outside U.S. add $75).
largest newsprint producers in North America with an annual capacity of about                                          Associate Reporter
                                                                                                                        (212) 224-3027      DAN LALOR
1,000,000 tons of newsprint and directory paper, according to the company. BMO                                       STANLEY WILSON
                                                                                                                                            Director of Sales
                                                                                                                                            (212) 224-3045
Nesbitt Burns acted as the financial advisor to Papier Masson and TD Securities and                             Washington Bureau Chief
                                                                                                                        (202) 393-0728      KEN LERNER
CSFB acted as financial advisors to White Birch.                                                     JANA BRENNING, KIERON BLACK
                                                                                                                                            Account Executive
                                                                                                                                            (212) 224-3043
                                                                                                                       Sketch Artists
                                                                                                                                            TOM GANNAGÉ-STEWART
                                                                                                                                            Account Executive [London]
Parties Sign Up To Cash Settle Calpine                                                                                  PRODUCTION
                                                                                                                            DANY PEÑA
                                                                                                                                            (44 -20) 7779-8998

CDS Index Trades                                                                                                               Director

                                                                                                    LYNETTE STOCK, DEBORAH ZAKEN
                                                                                                                                            DEWEY PALMIERI
                                                                                                                                            Reprint & Permission Manager
A total of 323 parties signed up to the Calpine credit default swap protocol                                             Managers           (212) 224-3675
designed by the International Swaps and Derivatives Association to cash settle                      MICHELLE TOM, ILIJA MILADINOV,
                                                                                                              MELISSA ENSMINGER,
CDS index trades. Parties had until last Thursday to sign up to the program. An                     BRIAN STONE, JAMES BAMBARA              CORPORATE
                                                                                                                             Associates     CHRISTOPHER BROWN
auction will be held tomorrow to determine a final settlement price.                                                       JENNY LO         Chief Executive Officer
                                                                                                     Web Production & Design Manager
   The number of adherents was significantly smaller than the 571 that signed up to                                                         DAVID E. ANTIN
                                                                                                                          MARIA JODICE      Chief Operating Officer
the Delphi CDS protocol. A spokeswoman for ISDA said that fewer signed up to the                          Advertising Production Manager
                                                                                                                                            ROBERT TONCHUK
                                                                                                                         (212) 224-3267
protocol because the association allowed investment managers to sign up, rather than                                                        Director/Central Operations & Fulfillment
                                                                                                                                            Customer Service: PO Box 5016,
requiring individual funds within an investment management firm to adhere. The                                         ADVERTISING
                                                                                                                                            Brentwood, TN 37024-5016.
                                                                                                                   JONATHAN WRIGHT          Tel: 1-800-715-9195. Fax: 1-615-377-0525
spokeswoman said that based on the number of entities within each fund that signed                                  Advertising Director    UK: 44 20 7779 8704
up to the Delphi protocol, the truer number of adherents would have been closer to                                      (212) 224-3566
                                                                                                                                            Hong Kong: 852 2842 6910
500 had the association required individual funds to sign up.                                        PAT BERTUCCI, ADRIENNE BILLS,          Editorial Offices: 225 Park Avenue South,
                                                                                                           PHILIP COX, MAGGIE DIAZ          New York, NY 10003.
   A source familiar with the protocol said that Calpine may also have fewer                                       Associate Publishers     Tel: 1-212-224-3990.
adherents because it is a less liquid name than Delphi. “Calpine was no way as
                                                                                                                                            Credit Investment News is a general
near as big an event as Delphi,” he said. He added that in comparison to Delphi,                                                            circulation newsweekly. No statement in
                                                                                                                                            this issue is to be construed as a
Calpine is less prevalent in collateralized debt obligations. “Calpine was not as                                                           recommendation to buy or sell securities
                                                                                                                                            or to provide investment advice.
popular in CDOs. The name was not as liquid.”
                                                                                                                                            Credit Investment News ©2006
   The Calpine protocol also excludes Calpine’s 7.75% ’15 convertible notes – an                                                            Institutional Investor, Inc. ISSN# 717-5030

aspect that may have discouraged parties that own these bonds from participating                                                            Copying prohibited without the
                                                                                                                                            permission of the Publisher.
in the protocol, said the source. The protocol explicitly excluded these bonds
because they contain unusual provisions that make them subordinate to senior
unsecured debt.

                         Tell Us What You Think
 Questions? Comments? Criticisms? Do you have something to say about a story
 that appeared in Credit Investment News? Or is there information you’d like to see
 published? If you have some news to dish our or have a new business strategy or
 hire you want to crow about, give us a call. Managing Editor Kristen Haunss can
 be reached at 212-224-3990 or

2                                           Copying prohibited without the permission of the publisher.
January 16, 2006                                                                    Credit Investment News

 Primary Market
Georgia-Pacific/Koch Deal                                                     bankers at Citigroup and GE Capital were not returned. A
                                                                              spokesman at UAL declined comment, as did a spokesman at
Hits Market                                                                   JPMorgan.
The $21 billion credit backing the acquisition of Georgia-Pacific
Corp. by Koch hit the market last Tuesday. The underwriter of
the $11 billion in loans is Citigroup. JPMorgan and Deutsche
                                                                              Deluxe Gets Reworked
Bank are the joint bookrunners on the deal (CIN 1/9). The                     The deal backing the leveraged buyout of Deluxe Film by
financing consists of a five-year, $1.5 billion revolver; a five-year,        MacAndrews & Forbes Holdings from The Rank Group was
$2 billion “A” term loan; a seven-year, $5 billion “B” term loan              reworked last week. The five-year revolver was increased from
and an eight-year, $2.5 billion second-lien loan. Koch is                     $125 million to $150 million, raising the total value of the deal
acquiring Georgia-Pacific for a total of $21.2 billion, which                 to $758 million. Additionally, pricing on the revolver and
includes cash and the assumption of assumed or refinanced debt.               $458 million term loan “B” dropped from the LIBOR plus
   Pricing on the revolver, term loan “A” and term loan “B” is                4-4 1/4% range down to LIBOR plus 3 3/4%. Credit Suisse
set at LIBOR plus 2 1/4%. The second-lien loan is priced at                   First Boston and Bear Stearns are leading the deal. A $150
                                                                              million second-lien term loan priced at LIBOR plus 8 1/4%, was
LIBOR plus 3 1/2%. The deal is set to close around the end of
                                                                              marketed before the holidays and not available to investors this
                                                                              go-around (CIN, 1/9).
   Headquartered in Atlanta, Georgia-Pacific is one of the
                                                                                 Deluxe Film is the world’s largest distributor of trailer and
world’s leading manufacturers and distributors of tissue, pulp,
                                                                              release prints for the motion picture industry as well as the
paper, packaging, building products and related chemicals. They
                                                                              industry’s biggest processor of 35 mm film. Officials at Bear
employ over 55,000 workers in 300 facilities throughout the
                                                                              Stearns and CSFB declined to comment. Calls to Deluxe and
U.S., Canada and 11 other countries. Calls to Georgia Pacific
                                                                              MacAndrews & Forbes were not returned.
and Koch were not returned. A Citigroup spokesman was
unavailable for comment. JPMorgan and Deutsche Bank
spokesmen declined comment.                                                   Hilton Acquisition Financing
                                                                              Comes To Market
UAL Exit Financing Launches                                                   The $5.5 billion deal backing Hilton Hotels’ acquisition of
Syndication of the exit financing for UAL Corp., the holding                  Hilton Group PLC came to market last Tuesday. The deal will
corporation for United Airlines, launched last Monday. The loan               unite the two Hilton brands that split in the 1960s and will allow
comprises a six-year, $300 million revolving credit facility and a            Hilton Hotels, which operates primarily in the U.S. and Canada,
six-year term loan that has the potential to be worth as much as              to become a global hotel business. The merger will create the
$2.7 billion. Both tranches are priced at LIBOR plus 4 1/2%.                  largest hotel company in the world in terms of revenue.
The financing is being led by JPMorgan and Citigroup. GE                         The Bank of America and UBS-led credit comprises a five-
Capital is the syndication agent on the deal, which is scheduled              year, $2.75 billion revolver; a five-year, $2 billion term loan “A”
to close at the end of the month.                                             and a seven-year, $750 million “B” term loan. The pricing on the
    Standard & Poor’s placed a B+ rating on the both the revolver             revolver and term loan “A” is LIBOR plus 1 1/2%, while the
and the term loan. Additionally, S&P assigned a recovery rating               term loan “B” has pricing of LIBOR plus 1 5 /8%. The deal is
of 1 to the facility. S&P anticipates assigning a corporate rating            solely for the hotel operations of Hilton Group. The British
of B to both United and UAL following the company’s                           company will then change its name to Ladbrokes PLC and
emergence from bankruptcy. Moody’s Investors Service placed a                 switch its focus to its betting operations, which are prevalent
rating of B1 on UAL’s exit loan.                                              throughout Europe.
    United entered Chapter 11 bankruptcy protection in                           The reorganized Hilton Hotels business will comprise
December 2002. A bankruptcy hearing is scheduled for this                     almost 2,800 hotels throughout 80 countries. Brands will
Wednesday and if approval is granted, United plans to emerge                  include: Conrad, Doubletree, Hampton Inn, Hilton Garden
from bankruptcy around Feb. 1. As the second largest U.S.                     Inn, Homewood Suites by Hilton and Hilton Vacations
carrier behind American Airlines, United has struggled with                   Club, as well as the flagship hotel. A spokeswoman at Bank of
its business since 2001 as a result of high fuel prices and                   America declined comment. Calls to Hilton and UBS were
cheaper ticket prices from non-legacy airlines. Calls to                      not returned.
                                               Copying prohibited without the permission of the publisher.                                     3
Credit Investment News                                                                    January 16, 2006

American Media Refinancing                                                  B of A Backs CorSolutions Medical
Hits Mart                                                                   Acquisition Financing
A $510 million refinancing for American Media hit the market                Bank of America is leading a $485 million deal backing Matria
last Tuesday. The deal consists of a six-year, $60 million revolver         Healthcare’s acquisition of CorSolutions Medical. The
and a seven-year, $450 million term loan “B.” JPMorgan is                   financing, syndication of which launched last week, breaks down
leading the deal and Deutsche Bank is also involved in the                  into a five-year, $30 million revolver; a six-year, $245 million
financing. Both tranches are priced at LIBOR plus 3 1/4%.                   senior secured “B” term loan; a $125 million term loan “C” and
Commitments are due by the end of January.                                  a seven-year, $85 million second-lien loan. Pricing is LIBOR plus
   American Media is the publisher of six of the largest circulation        2 1/2% on the revolver, “B” and “C” term loans and LIBOR
weeklies in the U.S. including Star, Weekly World News and the              plus 6 1/2% on the second lien.
National Enquirer. Other publications include Health and Fitness,              Moody’s Investors Service has affirmed its B1 corporate
Shape and Men’s Fitness. The company also produces more than                family rating on Matria and has rated the revolver and the “B”
200 mini-magazines covering topics such as finance, family,                 and “C” term loans B1. A rating of B3 has been placed on the
health, pets, homes and relationships. Larry Bornstein, senior              second-lien loan. Based in Marietta, Ga., Matria provides
v.p., general management and planning at American Media, could              healthcare, disease and high-risk pregnancy management
not be reached by press time. Bankers did not return calls.                 programs and services. Calls to Matria were not returned.

 People & Firms
Leveraged Finance Pros Launch                                               time to make a debut and coincidently the market is very strong,
                                                                            so our timing is good.”
New Lending Co.                                                                Charlesbank is the strategic investor in the firm. It is a
Looking to capitalize on a market of smaller deals, Peter                   middle-market private equity firm that manages more than
Gleysteen and Charlesbank Capital Partners have teamed up to                $1 billion of capital.
form Commercial Industrial Finance Corp. (CIFC). Open to all
sectors of lending, it will work on typical deals of about
$50 million. “There are record breaking levels of liquidity in the
                                                                            Moody’s Plans New
loan market [now], provided that the deal is north of                       Ratings Guidelines
$100 million,” said Gleysteen, a former head of JPMorgan’s                  Moody’s Investors Service plans to introduce both loss-given-
syndicated loan business and CIFC’s founder and ceo. “Once                  default ratings and probability-of-default ratings on non-financial
you go into double digits, it’s limited and it is the less than             speculative-grade corporate issuers. It has published a rating
$100 million space that we are addressing.”                                 methodology and is looking for feedback from market
   The 13-member firm brings together three of Gleysteen’s                  participants by Feb. 28. The new ratings disaggregate two
former colleagues at JPMorgan Chase, Nga Tran, Liz Chow and                 assessments already used in long-term ratings. Currently, long-
Steve Vaccaro. Other CIFC members include: Kevin Walz, from                 term ratings are opinions about expected credit loss, which
PB Capital, Alex Jackson, from JH Whitney and Sean                          incorporate the likelihood of default and the expected loss in the
Dougherty from Standard & Poor’s, among others. Gleysteen                   event of default. Separating the two should result in less
said the company will continue to grow. Along with targeting                conservative ratings on bank loans.
small, senior secured leveraged loans, it will also invest in large            “One of the reasons we embarked on this path, is that
leveraged loans, second-lien tranches, revolvers and non-U.S.               investors have told us they want to better understand what drives
credits. The firm is very busy, according to Gleysteen, and has             credit ratings, what is the likelihood of default,” explained Mike
already booked business. He would not comment on specific                   Rowan, group managing director and co-head of corporate
deals, however.                                                             finance in the Americas. “We had observed through our own
   On a loan-by-loan basis, CIFC can substitute for competitors             research that the ratings on senior secured bank debt relative to
in club loans and increase loan originator lending capacity for             senior unsecured bonds seemed a bit conservative and we were
individual obligors. The new company launched last Thursday                 looking into that issue.” Rowan could not comment on any
with a day one investment capacity of $400 million. “It was a               names that might be affected.
natural evolution of putting the business together in terms of                 The loss-given-default ratings (LGDs) will be assigned to the
timing,” Gleysteen said. “The start of the year was just a good             corporate family and its individual rated debt issues, such as
4                                            Copying prohibited without the permission of the publisher.
January 16, 2006                                                               Credit Investment News

loans, bonds and preferred stock. Probability-of-default (PDRs)            El Asmar said he hired four additional staffers, including two
ratings will be assigned to issuers, not specific debt instruments.     internal transfers and two recent graduates. He referred further
The standard Moody’s alpha-numeric scale will be used and the           questions to a spokeswoman, who did not return calls by press
rating will express Moody’s opinion regarding the likelihood any        time. El Asmar oversees the structuring and sale of products
entity within a corporate family will default on any part of its        across asset classes and has built the investor solutions group to
debt obligations.                                                       20 from scratch when he started last year.
   These changes would be applied to the roughly 1,300                     Before joining BNP, Hammerschmidt spent 12 years at
corporate names in North America that are speculative grade,            Morgan Stanley in New York, Hong Kong and San Francisco.
according to Moody’s. The changes are expected to be
introduced in the next six-to-18 months in North America. The
changes would likely be rolled out in waves during that period,
based on industry.                                                      Hallmark Entertainment Term
Barclays Bulks Up Structured                                            Loan Breaks Above Par
                                                                        Hallmark Entertainment’s $215 million term loan “B” broke in
Products Group                                                          the secondary market at 101 last week. A trader said trading
Barclays Capital has hired Jerry Hammerschmidt as a director in         volume was low on the name because of the small size of the
New York selling structured products to financial institutions.         deal. JPMorgan leads the loan, which is priced at LIBOR plus
Hammerschmidt had been a managing director in hedge fund                2 1/2%. The credit line also includes a $75 million term loan “A”
sales for six months at BNP Paribas in New York before joining          priced at LIBOR plus 2 1/4%, a $65 million second lien priced
Barclays. He declined comment on the reasons for his move. He           at LIBOR plus 6 1/2%, and a $90 million revolver priced at
started last Thursday and is reporting to Philippe El Asmar, head       LIBOR plus 2 1/4%.
of investor solutions for the Americas.                                    Hallmark Entertainment, a subsidiary of Hallmark Cards, is

           The most comprehensive annual discussions on vital fixed-income legal
           and compliance issues.

           Topics Include:
           ■   What’s on the Minds of SEC                 ■   Current Primary Markets Issues                       Keynote speaker:
               Regulators?                                                                                         Annette Nazareth
                                                          ■   Research & Market Commentary
           ■   Current SRO Issues in the Bond             ■   Structured Products                                  U.S. Securities and
               Markets                                                                                             Exchange Commission
                                                          ■   Municipal Finance
           ■   Compliance Officers’ Roundtable
                                                          ■   European Regulatory Developments
           ■   Credit Derivatives for Securities
               Lawyers                                    ■   Litigation and Enforcement
                                                          ■   Handling a Crisis: Avian Flu

           For details and registration, visit

Credit Investment News                                                                      January 16, 2006

one of the largest producers of movies for television. The                 on Lear’s net income, assets and shareholders’ equity for the year
Hallmark Channel, a global television network that focuses on              and quarter ended 2005.
family friendly entertainment, is a subsidiary of the company.                Moody’s Investors Service revised its rating outlook on Lear
One investor said “members of the Lindsay Wagner fan club are              to negative from stable. The action reflects lower production
welcome,” was a catch phrase for the bank meeting back in                  volumes from Lear’s two largest customers, General Motors and
December. A company spokesperson did not return calls.                     Ford, as well as challenges to the company’s profitability.
                                                                              A spokeswoman for Lear and a spokesman for Visteon did not
                                                                           return calls.
Quebecor Media’s Downsized
Term Loan Breaks                                                           KarstadtQuelle Trades Up
Quebecor Media’s $350 million term loan, which was downsized
from $460 million, broke in the secondary market at 101 1/4 last           On Delisting Rumors
week. Bank of America leads the deal, which is priced at LIBOR             German retailer KarstadtQuelle’s bank debt traded up on rumors
plus 2%. A $525 million new issue of 7.75% ’16 senior notes                its main shareholders are planning to acquire and delist the
also broke in the market and traded in the 101-102 range.                  company. Its second-lien term loan climbed nine points to the
   A trader said the term loan was downsized, while the size of            104-106 range, while its senior secured term loan “B” traded up
the notes was increased because of higher demand for the credit            a point to the 97-98 range.
in the bond markets. Quebecor Media, a subsidiary of Quebecor                  A delisting would be positive for the second-lien debt holders
Inc., a Canadian media communications company, sold the                    because they would be paid back above par based on a call
notes in a 144a private placement.                                         provision contained in the credit. The company has also posted
   Moody’s Investors Service assigned a B2 senior unsecured                good sales figures, helping to boost trading levels. Last week, the
rating to the new note issue. The rating agency said in a report           company said it had generated sales growth for the first time in
that the company has a good position in the Canadian                       ten years. In 2005, sales in its department and sales stores
newspaper and cable sectors and enjoys diverse cash flows.                 increased 1.2% to EUR1.5 billion.
                                                                               KarstadtQuelle, which is Europe’s largest department store
                                                                           and mail order group, took a number of steps to reduce its debt
Visteon, Lear Bonds Trade Down                                             last year, including the sale of real estate assets. In 2005, its group
The bonds of Visteon Corp. and Lear Corp. traded down as both              net liabilities fell to EUR2.7 billion, compared to EUR3.9 billion
companies announced additional charges and costs they would                in 2004. In December, it sold 40 properties for more than
incur in 2005. Visteon’s 8.25% ’10 bonds fell two-and-half points          EUR400 million. A company spokesman did not return calls.
to 86, while Lear’s 8.11% ’09 bonds fell a point to 93.4.
   The companies made the announcement at the Detroit
Automotive Conference in Dearborn, Mich. Visteon senior                     Investment Strategy
executives announced the auto supplier would incur
$800 million in restructuring costs related to a three-year
                                                                           PA Investor Shuns New
restructuring plan of certain underperforming plants and                   Issue Corporates
businesses. The company plans to sell or close up to 23 of its             Chuck Frank, v.p. and senior portfolio manager of $912 million
facilities in 2006 and 2007. In a filing with the Securities and           at S&T Wealth Management, is keeping his distance from new
Exchange Commission, Visteon said it expects that $250 million             issue corporate bonds. Frank bases his strategy on the assumption
of the restructuring charge will be non-cash costs and $400                that return available on corporate bonds is not worth the risk of
million is expected to be reimbursable under an escrow                     taking them on. “We much prefer looking at callables [agencies].
agreement with Ford Motor Co.                                              In order for us to invest in corporates [they] need to have
   Meanwhile, Lear executives announced the company is taking              exceptional value; even on the occasion that we do invest, we
an additional $342 million goodwill impairment charge in the               don’t go out very long,” Frank noted.
fourth quarter of 2005 for its interior products division. This is            Although he may not be investing in any new issue corporates,
on top of the $670 million impairment charge that the company              Frank has not sold off his old corporate bonds. One closely held
originally estimated it would have to take during the same                 corporate is that of General Motors Acceptance Corp. “General
period. The additional impairment charge reflects deterioration            Motors looks like they are going to sell off GMAC to a third
in the commercial outlook for this sector. In an SEC filing, Lear          party, in fact, the bond market sees it as imminent,” Frank noted.
Corp. said the impairment charge would have a negative impact              “We should see a credit upgrade for them once they sell. We are
6                                           Copying prohibited without the permission of the publisher.
January 16, 2006                                                                                                                    Credit Investment News

not going to be actively buying any more, but it would be a good                                        high yield. Median high-yield issuance is forecasted to be $98
idea to hold onto GMAC; they will be stronger.”                                                         billion this year, a 30% increase over 2005.
    “We really don’t look at specific credit situations. We wouldn’t                                       Growth is expected to be particularly strong in the CDO
buy something like AIG, for example, because that has been                                              sector. The median forecast has cash CDO issuance at $173
overblown by the market; we don’t look at specific recovery for                                         billion in 2006, an 8.8% increase over the estimated $159
value.” Frank’s portfolio is comprised of 84% government                                                billion issued in 2005. Leveraged loans are expected to be the
agencies and 16% in previously held corporates. His benchmark                                           largest volume cash CDO collateral at $63 billion in issuance,
is the Merrill Lynch Intermediate Government/Corporate Index.                                           up 12.5% from 2005, and accounting for nearly 40% of total
“It’s very suitable for what we do here,” Frank commented. His                                          cash issuance.
duration is between three and four years.                                                                  Michael Decker, senior v.p. and head of policy and research at
                                                                                                        the association, said more banks are expected to repackage loans
                                                                                                        into collateralized loan obligations. “Banks are expanding lending
Structured Credit                                                                                       activity to satisfy the demand of companies which choose to
BMA Survey Forecasts Increased                                                                          borrow through banks. To the extent that banks are ramping up
                                                                                                        lending activity, some loans are finding their way into CLOs,”
CDO, Corporate Bond Issuance                                                                            said Decker.
A robust economy and rising issuer demand for financing is                                                 The survey also found that members expect weaker credits to
expected to drive an increase in corporate bond issuance and                                            suffer as investors show less demand for yield. The growth in
collateralized debt obligations this year, according to an annual                                       CDOs and CLOs is partly driven by investors seeking higher
survey of members of the Bond Market Association.                                                       credit quality. “There is a trend among some groups of
   Corporate bond issuance is expected to rise 1.6% to $719                                             institutional investors that are looking to improve the credit
billion in 2006. Respondents expect the highest growth to be in                                         quality of their portfolios,” said Decker.

Secondary Marketplace Par Credit Trading Activity
This chart, provided by Citigroup Global Markets, tracks bid-ask prices for par credit facilities that trade in the secondary market. It also
tracks facility amounts, ratings, pricing and maturities.
                                                                                     LIBOR SPREAD
Issuer                                        Tranche                Rating             Coupon                   Maturity                      Bid(new)                Ask(new)
Accuride                                         TLB                  B+/B2                 225                  January-12                       101.5                    102
Allegheny Energy                                 TLC                   NR                   175                 February-11                      101.25                  101.625
Allied Waste                                    TL/LC                 B1/BB                 200                   March-12                        100.5                  100.875
American Air                                     TLB                  B+/B2                 525                 December-10                      101.75                   102.25
Amkor Tech                                        TL                  B+/B1                 450                  October-10                       103.5                    104
Blockbuster                                      RC                     NR                  125                   July-04                        95.75                    96.75
Blockbuster                                     TL B                  Ba2/BB                250                  August-11                       96.75                    97.75
Charter                                         TLA                    B/B2                 300                   April-10                      100.125                  100.375
Charter                                         TLB                    B/B2                 325                   April-11                       100.5                   100.75
Constellation                                   TLB                   BB/Ba2                175                 December-11                     101.125                  101.625
Direct TV                                        TLB                 BB-/Ba2                150                  March-10                         101                     101.25
El Paso                                           TL                  B3/B-                 275                  October-09                     100.75                   101.125
GGP                                              TLA                 Ba2/BB+                225                  October-07                       100                     100.5
Giant Eagle                                      TLB                 BB+/Ba3                125                 November-11                     100.625                  101.125
Goodyear                                        1L TL                 B1/BB                 175                  March-06                       100.75                   100.375
Hayes Lemmerz                                   TLB                   B1/BB-                325                   June-10                         99.75                   100.25
Jarden                                          TLB                   B1/BB-                200                  January-12                      100.75                    101
Lifepoint                                       TL B                 BB/Ba3                162.5                  April-12                       100.5                   100.75
Loews                                           TLB                   B1/B+                 225                    July-11                         100                   100.375
Mediacom Broad                                  TLC                  BB+/Ba3                200                  October-14                     101.375                  101.75
MGM                                              TLB                 Ba3/B+                 225                   April-12                       100.75                    101
Nalco                                            TLB                 B1/BB-                 200                 November-10                       101                     101.5
Novelis                                           TL                 BB-/Ba2                175                  January-12                     101.375                  101.75
Panamsat                                         TLB                 Ba3/BB                 225                   May-11                          101                    101.375
Revlon                                           TLB                  B3/B-                 600                    July-10                        103                    103.75
RH Donnelley                                     TLD                 BB/Ba3                 175                 December-10                       100.5                   101.5
Rockwood                                         TLE                  B1/B+                 225                   June-12                        101.25                   101.5
Select Medical                                    TL                  BB-/B1                175                 February-12                        100                   100.5
UAL DIP                                          RC                  BB+/Ba3                500                   June-05                        99.75                   100.25
UAL DIP                                          TLB                 BB+/Ba3                500                   June-05                        100.5                     101

This information is based on sources which we believe to be reliable but has not been independently verified. Accordingly, Citibank/Salomon Smith Barney and its affiliates do not assume responsibility
for, and do not make representations or warranties (express or implied) as to the accuracy of the information. This information sheet does not constitute an offer to sell or a solicitation of an offer to
purchase any securities or other instruments described herein.

                                                                  Copying prohibited without the permission of the publisher.                                                                           7
                                            February 7-8, 2006, Le Parker Meridien, New York City

                                            February 9, 2006, Le Parker Meridien, New York City

                                              Attend Both & Save!
                                           Last Year’s Attendees Included:
  AIG Global Investment Group        Credit Suisse First Boston         HypoVereinsbank                         PricewaterhouseCoopers
  AIG Global Investments             Criteria Group Consultancy         IFC International Finance Corporation   RBS - Rede Brasil Sul
  ALIX Partners LLC                  CSL Strategies                     IMPSAT                                  RBS Greenwich Capital
  Allied Capital                     CTC Consulting                     ING Investment Management               Republic Financial
   Alston & Bird LLP                 Cyrus Capital Partners             International Finance Corporation       Santan Der Central Hispano
  ALTMA Group, LLC                   D. E. Shaw & Co.                   (IFC)                                   SB Capital Group, LLC
  BackTrack Reports Inc              DAC, an Ernst & Young LLP          IUSACELL                                Silver Point Capital
  Banamex-Citigroup                  Company                            KPMG Corporate Finance                  SMBC
  Banco Galicia                      Darby Overseas Investments, Ltd.   KPS Special Situations Funds            Societe Generale
  Bank of America                    Davis Polk & Wardwell              Kronish Lieb Weiner & Hellman           SSG Capital Advisors, L.P .
  Bayside Capital                    First Financial Network, Inc.      Latam Partners                          Standard & Poor's
  Bear Sterns                        Focus Management Group             Marvel Enterprises, Inc.                Strasburger & Price, LLP
  Bingham McCutchen LLP              GE Capital                         Mayer Brown Rowe & Maw LLP              Sun Capital Partners, Inc.
  BNP Paribas                        GE Corporate Financial Services    MBIA                                    The Bank of New York
  Boston Street Advisors Inc         Glass & Associates, Inc.           Mellon HBV Alternative                  The Rohatyn Group
                                     GMAC Commercial Mortgage Corp.     Strategies LLC
  Cadwalader Wickersham & Taft                                                                                  The World Bank
                                     Goldin Associates, L.L.C.          MikroServE (Nig) Limited
  CapitalSource Finance LLC                                                                                     Tompkins, LLC
                                     Goldman, Sachs & Co.               Moneda Asset Management
  Carl Marks LLC                                                                                                Tradewinds Investment Management
                                     Greenberg Traurig, LLP             Morgan Creek Capital Management
  Cedarview Capital Management, LP                                                                              TRG Management
                                     Greenhill & Co., LLC               Morgan Stanley
  Chadbourne & Parke LLP                                                                                        United States Bankruptcy Court -
                                     Greylock Capital Management LLC    Morris Anderson & Associates, Ltd.      District of Maine
  Chanin Capital Partners
                                     Guggenheim Partners                Net Serviços de Comunicações S.A.       Varde Partners, Inc
  CM&D Capital Advisors LLC
                                     H.I.G. Capital                     New York University Salomon Center      Viking Global Investors LP
  Concordia Advisors LLC
                                     Hawaiian Airlines, Inc.            Noronha Advogados                       Weil, Gotshal & Manges LLP
  Congress Financial Corporation
                                     HP Financial Services              November Capital Investment             Wescott Strategic Management LLC
  Conway Mackenzie & Dunleavy
  Corporación Andina de              HSBC Bank USA NA                                                           Weston Group
                                                                        Orrick, Herrington & Sutcliffe LLP
  Fomento (CAF)                      Hughes Hubbard & Reed LLP                                                  Wilmer Cutler Pickering Hale &
                                                                        Pegasus Capital                         Dorr LLP
  Corporate Turnover Consulting      HVB Group
                                                                        Plough Penny Partners                   XRoads Solutions Group

  For Speaker & Agenda Updates Visit

  To Register:
  1.800.437.9997 or
  CLE/CPE Credits Available

In Association with:                                                            Sponsored by:
January 16, 2006                                                                                                                  Credit Investment News

Yield Curves (JANUARY 10)                                                                                                             Source: Standard & Poor's Global Fixed Income Research
               Yield curve spreads are derived from the industrial sector.
                                                                                                                                           Treasurys               A                    BB+
                                                                                                                                           AAA                     BBB                  BB/BB-

  8.0                                                                                                                                      AA







           0                            5                             10                          15                                  20                           25                                      30
                                                                                           YEARS TO MATURITY

 Weekly Credit Advancers/Decliners                                                         (01/5/06-01/12/06)
The following charts show the top five advancers and decliners in terms of % moves in the loan, bond and credit default swap markets
for the previous week. Data provided by Markit Group.
                                      Loan Advancers                                                                                        Loan Decliners
Facility                                          Previous Bid    Current Bid Percent Change      Facility                                         Previous Bid Current Bid Percent Change
McLeod (5/00) TLb                                     27.25           28.5               4.59     J.L. French (2nd Lien 8/04) Hybrid TL                  27               23.8            -11.852
Calpine (2nd Lien 8/03) Hybrid TL                     81.2           84.896              4.55     Citation 5/05 TLB                                      98.3             97.9            -0.407
Meridian Automotive (4/04) TLb                        79.1            81.5               3.03     Masonite International (US Tranche) TLB               98.886            98.58           -0.309
Atkins Nutritionals (12/03) TLb                      61.333           62.6               2.07     LifeCare Holdings (8/05) TLb                          94.05             93.85           -0.213
J.L. French (8/04) TLb                                90.7            92.4               1.87     Blockbuster (8/04) TLb                                96.773          96.648               -0.1

                                      Bond Advancers                                                                                        Bond Decliners
Name                                                   Spread                Weekly Chg (bp)      Name                                                           Spread            Weekly Chg (bp)
Ford Mtr Cr Co 5.75 12Jan09                              455                      -128            Cingular Wireless LLC 7.125 15Dec31                             117                      11
Gen Mtrs Corp 7.2 15Jan11                                780                       -96            Quebecor World Cap Corp 6.125 15Nov13                           278                      10
Gen Mtrs Accep Corp 5.625 15May09                        309                       -96            Comcast Corp 6.5 15Jan15                                         88                      10
Visteon Corp 8.25 01Aug10                                628                       -90            Boston Scientific Corp 4.25 12Jan11                              47                      10
Amern Axle & Mfg Inc 5.25 11Feb14                        297                       -47            Tyco Intl Gp S A 6.5 21Nov31                                    153                      10

                                      CDS Advancers                                                                                         CDS Decliners
Name                                                 Spread                    Weekly Chg (bp)    Name                                                 Spread                     Weekly Chg (bp)
Dana Corp                                              861                           -95          Computer Sciences Corp                                155                             56
Ford Mtr Co                                            875                           -93          Maytag Corp                                           151                             54
Amern Axle & Mfg Inc                                   514                           -93          Quebecor World Inc                                    298                             23
Ford Mtr Cr Co                                         480                           -81          The Gap Inc                                           121                             20
Gen Mtrs Accep Corp                                    369                           -78          Lexmark Intl Inc                                       92                             14

                                                                                                  N.B. Loan data is in price format                                                 Source: Markit Group

                                                                  Copying prohibited without the permission of the publisher.                                                                              9
Credit Investment News                                                                                                                               January 16, 2006

Search Directory
The following directory includes year-to-date search and hire activity for high-yield, distressed debt and CDO managers. The accuracy of
the information, which is derived from many sources, is deemed reliable but cannot be guaranteed. All amounts are in US$ millions unless
otherwise stated. To report manager hires and new searches, please call Kristen Haunss at (212) 224-3990, or fax (212) 224-3602.

New Searches
                                        Asset                                                     Mandate
Fund Info                               Size       Fund Type         Assignment                    Size   Consultant                      Comments/Firm Hired
Newton (Mass.) Retirement              USD240       Public D.B.      Global /                      USD25     Segal Advisors,              RFPs are available by contacting Brian Keenan at
System                                                               Active Fixed-Income                     Boston, MA, U.S.             ( Proposals are due Jan. 30. Selections
                                                                                                                                          should be made during 2Q.
Waltham Contributory Retirement        USD140       Public D.B.      US / Active Fixed-Income /    USD8      Wainwright Investment        Finalists selected: BlackRock, Eaton Vance, Caywood Scholl, and
System                                                               High-Yield                              Counsel, Boston, MA, U.S.    Goldman Sachs Asset Management. Selection expected soon.
Fall River (Mass.) Contributory        USD216       Public D.B.      US / Active Fixed-            USD10     Meketa Investment Group,     Searching for a high-yield bond manager. RFPs are available at
Retirement System,                                                   Income /High-Yield                      Braintree, MA, U.S.          (
                                                                                                                                          Proposals are due Jan. 12, 2006.
Watertown (Mass.) Contributory          USD70       Public D.B.      US / Active Fixed-            USD4      Wainwright Investment        Searching for an active high-yield bond manager. RFPs are
Retirement System                                                    Income /High-Yield                      Counsel, Boston, MA, U.S.    available at (
                                                                                                                                          Responses are due Jan. 17, 2006.
Danville (Va.) Regional Foundation,    USD200       Foundation       US/ Active Fixed-Income       USD40     Barry Bryant, Dahab          Searching for a bond manager. RFP available at
                                                                                                             Associates, Bay Shore, NY    ( Proposals due Nov. 7 with finals
                                                                                                                                          presentations scheduled for February.
Iowa Municipal Fire & Police          USD1,400      Public D.B.      Global/ Active Fixed-Income USD50       Summit Strategies            Searching for a global tactical fixed-income manager. Interested
Retirement System                                                                                            Group, St. Louis, MO         managers should contact Dennis L. Jacobs at (515) 254-9200.
                                                                                                                                          Proposals due Nov. 30. Will make a selection in January.
New Mexico Educational                USD7,500      Public D.B.      US/ Active Fixed-Income      USD1,300   Wilshire Associates,         Issued an RFP for at least one fixed-income manager. RFP is available
Retirement Board                                                                                             Santa Monica, CA             at ( Proposals were due Nov. 10, with a
                                                                                                                                          selection expected at the Dec. 9 board meeting.
Plymouth County (Mass.)                USD520       Public D.B.      US/ Active Fixed-Income/      USD20     Wainwright Investment        Searching for a high-yield bond manager. RFP is available at
Retirement System                                                    High-Yield                              Counsel, Boston, MA          ( Proposals were due Nov. 9.
Indiana State Police Pension Fund      USD300       Public D.B.      US/ Active Fixed-             USD18     N/A                          The fund is seeking a high-yield or hybrid fixed-income manager
                                                                     Income/ High-Yield                                                   to increase returns. An RFP, which will be released next week, will
                                                                                                                                          be due Oct. 21.
Waltham Contributory Retirement        USD140       Public D.B.      US/ Active Fixed-Income/      USD8      Sara Colorado, Wainwright    Searching for a high-yield bond manager. Email Sara Colorado at
System                                                               High-Yield                              Investment Counsel,          ( for a copy of the RFP. Proposals
                                                                                                             Boston, MA                   due Nov. 1, 2005. No timeframe for selection
Hampshire County Retirement System     USD138       Public D.B.      Global/ Active                USD8      Amanda Martin New           Searching for a global fixed-income manager. RFPs are available
                                                                     Fixed-Income                            England Pension Consultants at (
                                                                                                             Cambridge, MA               Proposals were due Sept. 23.
Woburn Retirement System                USD85       Public D.B.      US/Active Fixed-Income/       USD5      N/A                          Searching for a high-yield bond manager. Email Gus Aristizabal
                                                                     High-Yield                                                           at ( for copy of the RFP.
                                                                                                                                          Proposals were due Aug. 29.
Idaho Endowment Fund                  USD837.5      Endowment        US/Active Fixed-              USD5      RBC Dain Rauscher            Searching for a collateralized debt manager to
Investment Board                                                     Income/CDO                                                           handle USD5 million maiden allocation.
Haverhill Retirement System            USD145       Public D.B.      US/Active Fixed-Income/       USD5      Wainwright Investment        Issued an RFP for a high-yield bond manager. RFPs are
                                                                     High-Yield                              Counsel                      available by contacting Jeff Locke at (
                                                                                                                                          Proposals were due March 17, 2005.
Medford Retirement System              USD125       Public D.B.      US/Active Fixed-Income/       USD6      New England Pension          Searching for a high-yield bond manager. Email
                                                                     High-Yield                              Consultants                  ( for RFP. Proposals were due
                                                                                                                                          Jan. 21, 2005. Selection expected by 2Q 2005.
Marlborough Retirement System           USD75       Public D.B.      US/ Active Fixed-             USD5      Ben Paradise, Meketa         Searching for a high-yield bond manager. RFPs are available at
                                                                     Income/ High-Yield                      Investment Group,            ( Proposals were
                                                                                                             Braintree, MA                due Oct. 28.

Potential Searches
New Orleans Employees’ Retirement      USD390       Public D.B.      US / Active Fixed-Income      USD20     Morgan Stanley Investment    Fund will likely search for at least one non-core fixed-income
System                                                                                                       Consulting, New Orleans,     manager in 2006.
                                                                                                             LA, U.S.
Cooper Industries                      USD600      Corporate D.B.    US/ Active Fixed-Income/       N/A      None,                        May consider increasing its exposure to portable alpha fixed-income
                                                                     Portable Alpha                                                       strategies. Is looking for new strategies but hasn’t found anything
                                                                                                                                          satisfactory, so at the moment any increases would be with
                                                                                                                                          incumbent Westridge.
Missouri Local Government             USD2,800      Public D.B.      International/ Active          N/A      None,                        Considering investing in international fixed-income.
Employees Retirement System                                          Fixed-Income                                                         No timeframe for decision on whether to search.
California State Teachers             USD126,000    Public D.B.      US/ Active Fixed-Income        N/A      Altura Capital,              Deferred a decision on portfolio changes until a Dec. 7 investment
Retirement System (CalSTRS)                                                                                  New York, NY                 committee meeting. Possible shift could result in managers hires.
Illinois State Teachers               USD34000      Public D.B.      US/Alternative/               USD204    Callan Associates            Plan is building up its distressed debt allocation. No timeframe
Retirement System                                                    Distressed Debt                         Chicago, IL                  for decision on whether to search for a new manager or give
                                                                                                                                          assets to an incumbent.

 10                                                               Copying prohibited without the permission of the publisher.
January 16, 2006                                                                                                                     Credit Investment News

Potential Searches (cont’d)
                                        Asset                                                  Mandate
Fund Info                               Size       Fund Type         Assignment                 Size   Consultant                      Comments/Firm Hired
Oakland County (Mich.) Employees       USD1,000     Public D.B.      US/Active Fixed-Income/     N/A      Portfolio Analytics          Intends to review its fixed-income portfolio.
Retirement System                                                    High-Yield                                                        High-yield is a possibility.
Georgia Firefighters’ Pension Fund      USD530      Public D.B.      US/ Active Fixed-          USD53     Consulting Services          If a potential bill to permit more investment flexibility is passed,
                                                                     Income/ High-Yield                   Group LLC, Memphis, TN       fund would invest 10% in high-yield. Fund expects investment
                                                                                                                                       freedom to still be a couple of years off, however.
Georgia Peace Officers Annuity &        USD360      Public D.B.      US/ Active Fixed-          USD12     Southeastern Advisory,       If a potential bill is passed to relax investment restrictions,
Benefit Fund                                                         Income/ High-Yield                   Atlanta, GA                  would invest 10% of its assets in high-yield, private equity and
                                                                                                                                       real estate to increase returns.
Seattle City Employees’ Retirement     USD1,700     Public D.B.      US/ Active Fixed-          USD15     None,                        Fund is talking to firms that offer structured credit strategies, such as
System                                                               Income/ CDO                                                       CDOs and CLOs. No timeframe for decision on whether to search.
Vermont State Employees Retirement     USD1,000     Public D.B.      US/ Active Fixed-Income     N/A      New England Pension          Being educated on active fixed-income vs. passive fixed-income.
System                                                                                                    Consultants, Cambridge, MA

Updated Searches
Idaho Endowment Fund                    USD870      Endowment        US/ Alternative/ CDO       USD5      RBC Dain Rauscher,           Will search for maiden CDO manager once review is done.
Investment Board                                                                                          Minneapolis, MN
Ohio Police & Fire Pension Fund        USD9,000     Public D.B.      US/Active Fixed-Income/    USD177    Wilshire Associates          Shenkman Capital was terminated due to poor performance.
                                                                     High-Yield                                                        Assets will be used to fund new manager.
IAM National Pension Fund              USD5,200    Union/Multi-      US/Active Fixed-Income/    USD150    Hamilton Lane Advisors       Columbia Management Group was terminated due to
                                                   employer D.B.     High-Yield                                                        organizational changes. No timeframe for decision
                                                                                                                                       on whether to conduct a replacement search.
National Electrical Benefit Fund      USD10,200    Union/Multi-      US/Active Fixed-Income/    USD160    Marco Consulting Group       Columbia Management Group was terminated due to
                                                   employer D.B.     High-Yield                                                        organizational changes. No timeframe for decision
                                                                                                                                       on whether to conduct a replacement search.
Illinois State Teachers Retirement    USD34,000     Public D.B.      US/ Active Fixed-          USD190    Gordon Dickerson, Callan     LM Capital was terminated due to poor performance and strategic
System                                                               Income/ Core                         Associates, Chicago, IL      concerns. Money was given to incumbent Taplin, Canida & Habacht.
Worcester (City of) Retirement          USD629      Public D.B.      Europe/ Alternative/        N/A                                   Had discussed an allocation to distressed debt
System                                                               Absolute Return                                                   but no moves are imminent.

Source: iisearches - The Premier Daily Sales and Marketing Tool for Investment Managers. For further information please go to or contact Keith Arends at 212-224-3533.

I-GRADE                                                                                                COLLINS & AIKMAN
(continued from page 1)                                                                                (continued from page 1)
assumed default probability of BBB, or sub-investment grade                                            Lear executives said the company is still in discussions to form
credits, making them less attractive to structures. The change                                         the joint venture with billionaire investor Wilbur Ross, who
in S&P’s rating model created a buzz in the market when                                                bought Collins & Aikman’s European business in November. But
announced in November, triggering a rush of issuance under                                             David Wajsgras, cfo, added that the timing of the ultimate
the old regime. The alterations, according to market officials,                                        proposed joint venture “represented a significant unknown that
bring S&P’s model more in line with that of Moody’s                                                    directly affects our near term outlook.”
Investors Service.                                                                                        Bob Rossiter, ceo of Lear, told investors that according to the
   The sudden jump in investment-grade yield has put pressure                                          way the joint venture is structured, the deal would probably not
on houses to print transactions before market saturation squeezes                                      go ahead if Ross does not acquire Collins & Aikman’s North
spread levels in the sector. A number of structures are already                                        American business, which is under bankruptcy protection. He
roadshowing, including a €200 million plus deal from Calyon.                                           added, “We believe we should go ahead with the joint venture
Other firms in line include Morgan Stanley and UBS. Officials                                          and we are exploring that.”
from both firms declined comment. “People will naturally                                                  It is still unclear whether Ross will go ahead with plans to
gravitate toward the higher end to get kinder pricing,” said an                                        acquire the North American business. According to a bankruptcy
arranger at a U.S. house in London.                                                                    court document filed with the United States Bankruptcy Court
   An official close to Calyon said its deal, named Sonata, is                                         for the Eastern District of Michigan, he has only discussed
issuing a five-year note and a seven-year note linked to a portfolio                                   participation in a potential bid for the U.S. assets with Lear,
of 125 investment-grade corporate CDS. It is paying more than                                          Franklin Mutual Advisors and Ross’ limited partners.
100bps over six-month LIBOR and has a fixed recovery rate of                                              Rossiter said Ross is confident he is in a good position to
40%. “A string of similar transactions will drive spreads tighter so                                   acquire the business. Wajsgras said the company has discussed
they want to take advantage early,” said the official. Arrangers at                                    further acquisitions with WL Ross, including the possibility of
the French firm declined comment.              —Laura Cochrane                                         buying Collins & Aikman’s North American business. Ross did
                                                                  Copying prohibited without the permission of the publisher.                                                                               11
Credit Investment News                                                                      January 16, 2006

not return calls.                                                           tranche. Société Générale participated in the senior secured
    A spokesman for Collins & Aikman said the company is not yet            facilities only. Dovillers said the group participated because of a
in the final stages of a sale to WL Ross. He said there are a number        relationship the bank has with Carlyle. It has looked at other deals,
of parties considering buying the business and one option would             but has not participated in another yet.         —Kristen Haunss
be to sell parts of the company. Two possible units it would seek to
sell are its fabric making unit and its convertible roof plant. “To           LIBOR Plus
create value for creditors we are looking to determine if it is more
beneficial to sell all or part of our assets,” said the spokesman.          Lehman Brothers promoted two members of its leveraged
    Speculation that Ross was planning to take control of the auto          finance team to managing director, Jeff Abt and Peter
supplier was sparked over the summer when it was learned that               Schellbach. Abt joined Lehman Brothers’ leveraged finance
he had begun accumulating debt in Collins & Aikman (CIN,                    group in 1998 after four years at Scotia Capital. He has worked
8/8). Ross holds approximately 6.7% of Collins & Aikman pre-                on the loan capital markets desk since 2001. Schellbach, a
petition senior secured credit facility and approximately 10% of            distressed trader, helped lead Lehman Brothers to a number three
its debtor-in-possession financing. He is also the sole provider of         ranking in the Loan Market Week’s 2005 Best Trading Desk
an administration loan to the debtors’ European affiliates.                 survey, up from number 10 in 2004. Schellbach joined Lehman
                                                          —Kim Moore        Brothers in 2004, after a short stint at Goldman Sachs, where he
                                                                            was a v.p. and trader of distressed and crossover loans (LMW,
SOCIÉTÉ GÉNÉRALE                                                            3/4/04). He had previously worked at Deutsche Bank, where he
(continued from page 1)                                                     was a distressed loan trader and then a salesman.
Shunder, v.p., was brought over from Germany.
   The new push is the second go around for the bank. Sociéte
                                                                              Loose Change
Générale had been involved in the U.S. for several years, but
between 1998-2000 the business model was not as client-driven               Investors looking to catch up on their gossip had to look no
as the bank would have liked, de Laigue explained. As the                   further than the bank meeting last Tuesday for American Media.
economic cycle played out, there were some client exposures that            The meeting for the publisher of Star and the National Enquirer,
did not turn out well and in 2000, management turned its focus              offered the latest juicy details on Hollywood weddings, splits and
to rebuilding the European business. de Laigue, who had                     all the baby drama one could ask for.
spearheaded the European effort between 1990-98, went back to
London in 2001 and the U.S. office was shut down. At the
                                                                              Quote Of The Week
closing it had a portfolio of about $700 million of exposure,
which it has brought down to zero.                                          “There are record breaking levels of liquidity in the loan market
   de Laigue explained the bank hopes to draw upon its strength             [now], provided that the deal is north of $100 million. Once you go
in the European leveraged lending market, where they rank in                into double digits, it’s limited and it is the less than $100 million
the top three for leveraged finance arrangers in Europe, for Jan.-          space that we are addressing.” —Peter Gleysteen, founder and ceo
May 2005, according to EuroWeek. “We have a leading leveraged               of Commercial Industrial Finance Corp., describing the his new
finance practice in Europe, which we plan to combine with a                 firm’s lending strategy (see story, page 4).
very strong product and industry capabilities in New York,” he
said. Building on the bank’s European relationships will be a key             One Year Ago In The Credit Markets
aspect of building the U.S. franchise, he said. Of the dozen or so
key relationships Société Générale has in Europe, about half are            Warner Chilcott Corp.’s $1.4 billion “B” term loan brought in
U.S. firms. “I think there will be a lot of interaction [between            more than $2 billion in investor commitments despite having
the European and U.S. desks], because the world is becoming                 total leverage over seven times. [Despite the high leverage, the
smaller,” he said. “The markets in the U.S. and Europe are no               pharmaceutical company’s strong business profile and steady
longer separate, there has been an influx of the U.S. investor              product revenue convinced buysiders.] Unsecured creditors of
base into Europe.” de Laigue said there was not a right or wrong            bankrupt airline ATA Holdings were set for a substantial recovery
time to reenter the market, but said the decision was based on              on their defaulted investments. The Seaport Group, a New York
the strides the group had made in Europe.                                   distressed dealer, was expecting ATA’s bonds to recover to the mid-
   The group served as a managing agent on its first deal in                70’s, as opposed to the mid-50’s where they were trading the week
November. The financing backed the $942 million acquisition of              before. [Predictions proved to be disastrously wrong as bonds of
SS&C by The Carlyle Group. The deal consisted of a $75 million              ATA were trading between 4.30 and 4.50, as of their last sale date
revolver; $200 million term loan “B” and a $75 million Canadian             on Dec. 21. The bonds had slid as low as the 2.00 range.]

12                                           Copying prohibited without the permission of the publisher.

To top