NEW YORK, July 25 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
The automaker is raising cash to help fund Chrysler Group's
buyout from DaimlerChrysler AG DCXGn.DE by Cerberus Capital
The buyout is still expected to close because underwriters
remain committed to providing financing, market sources told
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
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.