Coronavirus Impact
Ladder Corp. Engages Moelis; Ford Reports 12.5% YoY Decrease in First-Quarter Sales
Thu 04/02/2020 19:25 PM
A record 6.6 million Americans filed for unemployment last week, according to figures released today. Also today, the S&P 500 and Dow Jones Industrial Average traded up 2.28% and 2.24%, respectively.
Energy
Ion Geophysical, which yesterday said that first-quarter revenues would be the highest since 2014, announced today that it plans to scale down costs by $18 million during the remaining nine months of 2020 to preserve cash and manage liquidity, building on the >$20 million permanent cuts taken in January of this year. The company said that its “asset light strategy avoids significant fixed costs and provides flexibility to easily scale the business to meet demand.”
Paterson-UTI Energy Inc. announced this morning that it was reducing 2020 capex 60%, to $140 million, reducing SG&A and other support costs, and cutting certain executive pay 50%.
Industrials and Airlines
Transdigm announced cost-mitigation efforts, including a workforce cut of 15%, as well as executive pay cuts. The company withdrew its fiscal year 2020 guidance. In addition, the company announced a $1 billion issuance of 5.75-year secured notes, floating price talk of between 8% and 8.25%.
Textron announced that on April 1 it entered into a 364-day, $500 million term loan, borrowing the full amount on April 2.
Arconic Corp. announced that it would borrow $500 million from its revolver as a “proactive” measure. In addition, it said it would defer initiating its dividend.
Team Inc. announced in response to current market and industry conditions, it has implemented the following key initiatives to significantly lower costs and sustain cash flow in all aspects of the business: reduced salaries for executive leadership team, reduced other leadership members’ base salaries by 10%, lowered 2020 annual capex by more than 30%, rationalized facilities and eliminated “all non-essential costs,” furloughed technicians that don’t have scheduled work, and suspended the employer match in its executive deferred compensation retirement plan and 401(k) plan, in addition to other measures.
Macquarie Infrastructure Corp. provided a Covid-19 response today after the close, noting that it is withdrawing guidance, suspending its dividend and that on March 17, it drew $599 million on its holding company revolving credit facility and $275 million on its Atlantic Aviation revolver. According to the company, prior to the drawdowns the company had approximately $300 million of cash on hand. The release adds: “MIC intends to repay and cancel the Atlantic Aviation Revolving Credit Facility. Cancelling the Revolving Credit Facility will mean that the remaining Atlantic Aviation Term Loan, which matures in December 2025, will not be subject to an ongoing leverage-based maintenance covenant.” MIC notes that it is in compliance with its covenants and that there are “no cross-collateralizations of liabilities among MIC’s operating businesses or any holding company guarantee of the liabilities of any of MIC’s operating business.”
Retail
Walgreens Boots Alliance reported earnings for the period ended Feb. 29 and said it was “not in a position to accurately forecast the future impacts” from Covid-19 due to “the many rapidly changing variables related to the pandemic.” The company plans to “provide further updates in the next earnings report when both the potential positive and negative effects of the pandemic will be known in more detail.”
Hotels, Restaurants and Leisure
Marriott Vacations Worldwide Corp increased its warehouse credit facility by $181 million, to approximately $531 million.
Brinker International Inc. gave the following sales update:
The Cheesecake Factory said first-quarter fiscal 2020 comparable restaurant sales were expected to be down approximately 13%. “March comparable sales declined approximately 46%, reflecting the impact of COVID-19,” the company said.
Del Taco Restaurants Inc. announced that on March 16, “as a precautionary measure,” the company borrowed $25 million under its senior credit facility and another $25 million on March 30.
Restaurant Brands International Inc. launched a $500 million offering of first lien senior secured notes due 2025.
Consumer Discretionary
Edgewell Personal Care Co. announced that it had entered into a new credit agreement providing for a $425 million secured credit facility, to replace its existing facility which will mature in June 2020.
Bassett Furniture Industries announced that earlier this week the company received a commitment to double its $25 million credit facility to $50 million.
Real Estate
Ladder Capital Corp announced that it had “recently engaged Moelis & Company LLC to evaluate financing alternatives to enable it to both navigate potential further market dislocations as well as take advantage of opportunities created by those dislocations.”
Kimco Realty Corp. announced that it had obtained a new $375 million unsecured term loan “aimed at enhancing the company’s abundant liquidity position.”
Materials
Rayonier Inc. entered into a second amendment to its credit agreement, increasing its revolver commitments to $250 million and extending its maturity date to 2025; extending the term loan’s maturity to 2028; and increasing the revolver margin by 25 bps.
Healthcare
Tenet Healthcare Corp. announced the withdrawal of its previous first-quarter and full-year 2020 fiscal outlook. “As of March 31, 2020, Tenet’s liquidity position included approximately $350 million of excess cash and cash equivalents and approximately $1.0 billion of borrowing availability under its senior secured revolving credit facility. Tenet is also seeking an amendment to its senior secured revolving credit facility, which will include increasing total borrowing capacity under the facility to $2.0 billion (up from $1.5 billion). In addition, other sources of potential liquidity for Tenet include funding that may be available to healthcare providers under the CARES Act, proceeds from the previously announced sale of our Memphis hospitals for approximately $350 million, and potential sale and lease-back transactions that Tenet may evaluate,” the company said in a news release.
Communication Services
Lamar Advertising announced that in March, the company “proactively” drew down $535 million on its $750 million revolving credit facility to provide additional liquidity and financial flexibility. In addition, the company says that it is “[s]harply curtailing its spending on capital projects” and “now expects total capital expenditures for 2020 to be approximately $58 million, down from its prior estimate of $130 million, with maintenance capital expenditures comprising approximately $26 million of total capital expenditures.” The company is also suspending its acquisition activity, instituting a “hiring freeze.” According to the release, Lamar is also “[i]nitiating discussions with many billboard ground lessors about amending their agreements to reduce future fixed site lease expenses” and “[h]aving constructive conversations with its airport and transit franchise partners about temporary relief from current and future annual contractual guarantees.”
Transportation
Ford Motor Co. reported a 12.5% decreased in first-quarter 2020 domestic sales. See details HERE.
Ryder announced on April 1 that the company executed a $400 million 364-day unsecured term loan, the proceeds of which have been placed in cash accounts, and ultimately will be used for general corporate purposes. The company says that it also has a fully-drawn $300 million trade receivables purchase and sale program that expires on June 11, which it intends to renew on or before its expiration date. The company also withdrew its financial guidance for the quarter ended March 31, and the fiscal year ending Dec. 31.
Navistar announced it was pausing manufacturing at its Springfield, Ohio, Huntsville, Alabama, and Escobedo, Mexico plants.
Autoliv today announced that it would draw down the remaining $600 million in principal amount under its revolving credit facility; it had previously drawn down $500 million on March 19. Following the draw, the company held approximately $1.4 billion in cash.
Energy
Ion Geophysical, which yesterday said that first-quarter revenues would be the highest since 2014, announced today that it plans to scale down costs by $18 million during the remaining nine months of 2020 to preserve cash and manage liquidity, building on the >$20 million permanent cuts taken in January of this year. The company said that its “asset light strategy avoids significant fixed costs and provides flexibility to easily scale the business to meet demand.”
Paterson-UTI Energy Inc. announced this morning that it was reducing 2020 capex 60%, to $140 million, reducing SG&A and other support costs, and cutting certain executive pay 50%.
Industrials and Airlines
Transdigm announced cost-mitigation efforts, including a workforce cut of 15%, as well as executive pay cuts. The company withdrew its fiscal year 2020 guidance. In addition, the company announced a $1 billion issuance of 5.75-year secured notes, floating price talk of between 8% and 8.25%.
Textron announced that on April 1 it entered into a 364-day, $500 million term loan, borrowing the full amount on April 2.
Arconic Corp. announced that it would borrow $500 million from its revolver as a “proactive” measure. In addition, it said it would defer initiating its dividend.
Team Inc. announced in response to current market and industry conditions, it has implemented the following key initiatives to significantly lower costs and sustain cash flow in all aspects of the business: reduced salaries for executive leadership team, reduced other leadership members’ base salaries by 10%, lowered 2020 annual capex by more than 30%, rationalized facilities and eliminated “all non-essential costs,” furloughed technicians that don’t have scheduled work, and suspended the employer match in its executive deferred compensation retirement plan and 401(k) plan, in addition to other measures.
Macquarie Infrastructure Corp. provided a Covid-19 response today after the close, noting that it is withdrawing guidance, suspending its dividend and that on March 17, it drew $599 million on its holding company revolving credit facility and $275 million on its Atlantic Aviation revolver. According to the company, prior to the drawdowns the company had approximately $300 million of cash on hand. The release adds: “MIC intends to repay and cancel the Atlantic Aviation Revolving Credit Facility. Cancelling the Revolving Credit Facility will mean that the remaining Atlantic Aviation Term Loan, which matures in December 2025, will not be subject to an ongoing leverage-based maintenance covenant.” MIC notes that it is in compliance with its covenants and that there are “no cross-collateralizations of liabilities among MIC’s operating businesses or any holding company guarantee of the liabilities of any of MIC’s operating business.”
Retail
Walgreens Boots Alliance reported earnings for the period ended Feb. 29 and said it was “not in a position to accurately forecast the future impacts” from Covid-19 due to “the many rapidly changing variables related to the pandemic.” The company plans to “provide further updates in the next earnings report when both the potential positive and negative effects of the pandemic will be known in more detail.”
Hotels, Restaurants and Leisure
Marriott Vacations Worldwide Corp increased its warehouse credit facility by $181 million, to approximately $531 million.
Brinker International Inc. gave the following sales update:
The Cheesecake Factory said first-quarter fiscal 2020 comparable restaurant sales were expected to be down approximately 13%. “March comparable sales declined approximately 46%, reflecting the impact of COVID-19,” the company said.
Del Taco Restaurants Inc. announced that on March 16, “as a precautionary measure,” the company borrowed $25 million under its senior credit facility and another $25 million on March 30.
Restaurant Brands International Inc. launched a $500 million offering of first lien senior secured notes due 2025.
Consumer Discretionary
Edgewell Personal Care Co. announced that it had entered into a new credit agreement providing for a $425 million secured credit facility, to replace its existing facility which will mature in June 2020.
Bassett Furniture Industries announced that earlier this week the company received a commitment to double its $25 million credit facility to $50 million.
Real Estate
Ladder Capital Corp announced that it had “recently engaged Moelis & Company LLC to evaluate financing alternatives to enable it to both navigate potential further market dislocations as well as take advantage of opportunities created by those dislocations.”
Kimco Realty Corp. announced that it had obtained a new $375 million unsecured term loan “aimed at enhancing the company’s abundant liquidity position.”
Materials
Rayonier Inc. entered into a second amendment to its credit agreement, increasing its revolver commitments to $250 million and extending its maturity date to 2025; extending the term loan’s maturity to 2028; and increasing the revolver margin by 25 bps.
Healthcare
Tenet Healthcare Corp. announced the withdrawal of its previous first-quarter and full-year 2020 fiscal outlook. “As of March 31, 2020, Tenet’s liquidity position included approximately $350 million of excess cash and cash equivalents and approximately $1.0 billion of borrowing availability under its senior secured revolving credit facility. Tenet is also seeking an amendment to its senior secured revolving credit facility, which will include increasing total borrowing capacity under the facility to $2.0 billion (up from $1.5 billion). In addition, other sources of potential liquidity for Tenet include funding that may be available to healthcare providers under the CARES Act, proceeds from the previously announced sale of our Memphis hospitals for approximately $350 million, and potential sale and lease-back transactions that Tenet may evaluate,” the company said in a news release.
Communication Services
Lamar Advertising announced that in March, the company “proactively” drew down $535 million on its $750 million revolving credit facility to provide additional liquidity and financial flexibility. In addition, the company says that it is “[s]harply curtailing its spending on capital projects” and “now expects total capital expenditures for 2020 to be approximately $58 million, down from its prior estimate of $130 million, with maintenance capital expenditures comprising approximately $26 million of total capital expenditures.” The company is also suspending its acquisition activity, instituting a “hiring freeze.” According to the release, Lamar is also “[i]nitiating discussions with many billboard ground lessors about amending their agreements to reduce future fixed site lease expenses” and “[h]aving constructive conversations with its airport and transit franchise partners about temporary relief from current and future annual contractual guarantees.”
Transportation
Ford Motor Co. reported a 12.5% decreased in first-quarter 2020 domestic sales. See details HERE.
Ryder announced on April 1 that the company executed a $400 million 364-day unsecured term loan, the proceeds of which have been placed in cash accounts, and ultimately will be used for general corporate purposes. The company says that it also has a fully-drawn $300 million trade receivables purchase and sale program that expires on June 11, which it intends to renew on or before its expiration date. The company also withdrew its financial guidance for the quarter ended March 31, and the fiscal year ending Dec. 31.
Navistar announced it was pausing manufacturing at its Springfield, Ohio, Huntsville, Alabama, and Escobedo, Mexico plants.
Autoliv today announced that it would draw down the remaining $600 million in principal amount under its revolving credit facility; it had previously drawn down $500 million on March 19. Following the draw, the company held approximately $1.4 billion in cash.
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