Waiving not drowning

Lucite International has secured consent from a majority of its lender group to waive maintenance covenants for the next two quarters, according to a person close to the situation. Lenders were offered a 25bp fee to consent to the waiver, which must be agreed by 50% of the syndicate by this Monday. Merrill Lynch is acting as agent. The deal was agreed as part of an agreed M&A process that will see sponsor Charterhouse Development Capital sell the business to trade buyer Mitsubishi Rayon Co in an all cash deal. Senior debt investors will be taken out at par.

In 2007 Lucite repriced its US$950m term loan B, taking advantage of plunging debt prices that allowed bookrunner Merrill Lynch to cut the margin on the term loan B from 275bp to 225bp. At the time investors were paid a 10bp fee, and given a 101 soft call for one year as a guarantee against further repricing. In 2006 Lucite had completed a dividend recap and put in place a mainly B loan package.

That financing was made up of the term loan B, plus a US$100m six-year revolver and a €260m eight-year subordinated PIK loan non-callable for the first year, with call protection of 102, 101 and par thereafter.

Lucite is an acrylic-based products manufacturer and is 78% owned by Charterhouse Development International.

Senior lenders to Virgin Media have agreed to a waiver to allow the borrower to postpone amortisation payments. The request was to allow the company to postpone the payments until 2012. The company is due to make three amortisation payments of more than £2bn from 2010 to 2011.

Virgin Media said over 90% of senior lenders had approved the proposed amendments. Lenders representing over 70% of the A tranches and over 80% of the B tranches have individually agreed to move into new tranches with modified payment terms.

Lenders were offered a 25bp consent fee across all A, B, C and RCF tranches.

Lenders to the A, B and RCF were offered an additional 100bp fee for transferring to new tranches, and the deal includes margin increases of 137.5bp to the A, 150bp to the B and 137.5bp to the RCF. The facility documentation allows for additional high-yield debt offerings (pari passu with existing bonds) and senior debt tranches with maturities beyond existing facilities, with proceeds of each used to repay senior debt.

In return the company will repay 20% of the outstanding term loan A by the end of April 2009. It plans to raise the funds either from existing operations, from its balance sheet or from a possible high-yield bond issue.

Under the terms agreed the A loan lenders were asked to individually agree to defer their remaining amortisation payments and final maturity date, and the lenders under the revolving facility were asked to individually agree to defer the final maturity date, in each case until June 2012.

The B loan lenders were asked individually to agree to relinquish their pro rata right to pre-payments until the A tranches are repaid.

The agreement will also allow the borrower to relax the leverage and interest coverage financial covenants and adjust definitions in the financial covenants, to accommodate the impact of increased interest expense and other effects of the amendments to the senior facilities agreement. The company is also permitted to add an additional debt basket for tax-related financings to be used to repay debt under the senior facilities agreement.

After repayment of 20% of the A tranches and pro rata payments to non-consenting B lenders, the new amortisation schedule will now be made up of a £34m payment in March 2010, a £174m payment in September 2010, a £290m payment in March 2011, a £1.162bn payment in June 2012, £1.904m in September 2012 and £300m in March 2013.

Auctions continue

There is no prospect of a flood of new issues in the near term but a number of auction processes remain ongoing. Shares in Q-Med, a Swedish biotech business, were lifted after the announcement of a SKr3.9bn (US$506m) take-private offer by Nordic buyout firm EQT on November 3.

EQT offered SKr39 per share in cash through acquisition vehicle Ivytan, representing a 24% premium to the closing share price on October 31 when Q-Med shares were trading on the OMX at SKr37.4.

Q-Med’s main shareholder, Bengt Agerup, has already agreed to accept the offer when it is completed. Uppsala-headquartered Q-Med has its headquarters in Uppsala and produces medical implants. The company has approximately 700 employees and reported SKr1.3bn of sales in 2007.