RLPC-UPDATE 1-Chrysler Corp postpones $12 bln auto loan deal

Wed Jul 25, 2007 11:21am EDT

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NEW YORK, July 25 (Reuters) - Chrysler Corp. on Wednesday postponed its $12 billion auto loan deal, while Chrysler Financial Services sweetened the pricing on $6 billion of term loans for the second time, market sources told Reuters Loan Pricing Corp.

The automaker is raising cash to help fund Chrysler Group's buyout from DaimlerChrysler AG DCXGn.DE by Cerberus Capital Management.

The buyout is still expected to close because underwriters remain committed to providing financing, market sources told RLPC.

The financing was launched by J.P. Morgan on June 28. Bear Stearns, Goldman Sachs, Citigroup and Morgan Stanley are co-arrangers of the financing.

Pricing on Chrysler Financial's $4 billion first-lien term loan is being widened to 400 basis points over Libor from 300 basis points over Libor last week, while pricing on the $2 billion second-lien term loan is being bumped up to 650 basis points over Libor from 550 basis points over Libor.

The first-lien term loan is being issued at 99, down from an original issue discount of 99.5 in an earlier set of changes last week. The second-lien piece is now being offered at 98.5, down from 99 last week.

In an earlier set of changes last week, call language on both term loans was tightened. The first-lien piece is now callable at 102, 101 and par (from 101, par), while the second-lien loan is now callable at 103, 102, 101, par (from 102, 101, par).

Also, previously Chrysler Financial removed the incremental term loan basket. In addition, a debt to net worth covenant governing the first-lien loan was added to the second-lien loan, which will be governed by the borrowing base.

Ratings on Chrysler Financial's first- and second-lien term loans are "B1"/"BB-" and "B2"/"CCC+", respectively. The corporate family rating is "B1"/"B". A $2 billion revolver fills out the rest of the Chrysler Financial loan.

Books on the Chrysler Financial deal close at 5 p.m. (2100 GMT) Thursday. The deal is expected to allocate Tuesday, with closing and funding scheduled for August 3.

Chrysler Corp.'s $12 billion financing will now be marketed at a later date. As part of the postponed deal, Cerberus Capital Management and DaimlerChrysler have agreed to hold Chrysler Corp.'s $2 billion delayed-draw second-lien piece.

Early last week, Chrysler Corp.'s $10 billion first-lien term loan was being talked wider at 375-400 basis points over Libor from 325 basis points over Libor, while price talk on its $2 billion second-lien piece was seen drifting to the 700 basis points over Libor range from 600 basis points over Libor.

Chrysler Corp.'s corporate family rating is "B3"/"B." The first-lien loan is "B1"/"B+" and the second-lien loan is "Caa1"/"B-".

DaimlerChrysler sold in June an 80.1 percent equity stake in Chrysler Holding to Cerberus, which will invest $7.4 billion in the automaker and its finance division. DaimlerChrysler will retain a 19.9 percent stake in the new company.

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