Archstone may beef up discount; United Rentals floats talk; LCDX heads up; Chrysler second-lien bid dips

By Sara Rosenberg

New York, Oct. 10 - Archstone-Smith Trust is rumored to be considering increasing the original issue discount on its term loan A, and price talk on United Rentals Inc.'s asset-based credit facility started making its way around the market as a retail launch for the transaction is expected to occur in the near future.

Moving to the secondary, LCDX was slightly higher during Wednesday's session as market sentiment remained positive and Chrysler Financial's second-lien term loan saw a drop on the bid side after autoworkers walked out.

Market talk is that Archstone-Smith Trust may offer its term loan A at a cheaper price than the 99 handle the tranche was launched with last month, according to a market source.

The source continued to say that no official word on this rumored change has emerged.

The $2.4 billion four-year term loan A is priced at Libor plus 300 basis points.

There is mandatory amortization on the term loan A of $300 million in year one, $250 million in year two, $250 million in year three and the remaining amount in year four.

Archstone-Smith is also currently syndicating a $750 million four-year revolver that is also priced at Libor plus 300 bps.

The revolver carries a 200 bps upfront fee and a 50 bps unused fee.

Technically, the books on the deal were supposed to close on Oct. 2, but the syndicate decided to keep accepting commitments past that original deadline.

Archstone-Smith's $5.131 billion senior secured credit facility (BB-) also includes a $1.981 billion five-year term loan B priced at Libor plus 325 bps that is not being syndicated right now.

Financial covenants include minimum debt service coverage, a maximum leverage ratio and tangible net worth.

Lehman Brothers, Bank of America and Barclays are the lead banks on the deal.

Proceeds from the credit facility, which already funded, were used to help fund the buyout of the company by Tishman Speyer and Lehman Brothers for $60.75 per unit in cash. The transaction was valued at $22.2 billion, including the assumption and refinancing of Archstone-Smith's outstanding debt and excluding transaction costs.

Archstone-Smith is an Englewood, Colo.-based real estate investment trust. Tishman Speyer is a New York-based owner, developer, operator and fund manager of real estate.

United Rentals price talk emerges

Pricing guidance on United Rentals' $2.5 billion asset-based senior secured credit facility surfaced, with both tranches under the deal being talked at Libor plus 275 bps, according to a market source.

The facility is comprised of a $1.5 billion six-year revolver and a $1 billion six-year term loan.

Bank of America, Credit Suisse, Morgan Stanley and Lehman Brothers are the lead banks on the deal.

The facility was launched to senior managing agents last Thursday. Firm timing on a retail syndication bank meeting has yet to be announced, but sources are hearing that the launch could take place within the next two weeks.

It is also speculated that United Rentals may be primarily syndicated to banks as opposed to institutional investors, one fund manager remarked.

Proceeds from the credit facility will be used to help fund the buyout of the company by Cerberus Capital Management, LP for $34.50 in cash per share. The transaction is valued at $6.6 billion, including the assumption of $2.6 billion in debt obligations.

Of the total revolver amount, about $550 million is expected to be drawn at close.

Other buyout financing will come from the issuance of $2.35 billion of secured second-lien fixed- and/or floating-rate notes and $1.65 billion of unsecured fixed- and/or floating-rate senior notes.

The bonds are backed by commitments for a $2.35 billion secured bridge loan and a $1.65 billion unsecured bridge loan.

Completion of the transaction is subject to customary closing conditions, including stockholder approval and regulatory review. A stockholder meeting is scheduled for Oct. 19.

United Rentals is a Greenwich, Conn., equipment rental company.

LCDX trades up

Switching to secondary happenings, LCDX inched its way higher in trading on Wednesday despite equities being mostly down, according to traders.

The series 9 LCDX ended the day at 100.20 bid, 100.30 offered, up from Tuesday's levels of 100.10 bid, 100.20 offered, traders said.

The series 8 LCDX ended the day at 97.80 bid, 97.90 offered, according to one trader, and at 97.77 bid, 97.82 offered, according to a second trader, up from Tuesday's levels of 97.70 bid, 97.80 offered.

As for the cash market, traders said that there was a positive tone but levels in general were pretty much unchanged in relatively light trading.

Stocks were mixed, with Nasdaq up 7.70 points, or 0.27%, Dow Jones Industrial Average down 85.84 points, or 0.61%, S&P 500 down 2.68 points, or 0.17%, and NYSE down 15.81 points, or 0.15%.

Chrysler Financial second-lien slides

Chrysler Financial saw the bid on its second-lien term loan come down after many autoworkers walked off the job as contract negotiations stalled, according to a trader.

The second-lien term loan ended the day at 98¾ bid, 99½ offered, compared with Tuesday's levels of 99 bid, 99½ offered, the trader said.

The company's first-lien term loan was said to be unchanged, with one trader quoting it at par 1/8 bid, par 5/8 offered and another trader quoting it at par bid, par ½ offered.

"The strike thing isn't viewed as the worst thing in the world. They're owned by private equity now. People don't really expect Cerberus to just give in on all demands. They're going to be a little tougher. This is just a temporary hitch," one trader remarked.

The trader proved correct - by early evening news surfaced that the United Auto Workers union reached a tentative contract with Chrysler, bringing the short-lived strike to an end.

Chrysler Financial is a provider of financial services for vehicles in the NAFTA region.

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