Smurfit-Stone's $1.2 billion loan said to rise

Updated 2/10/2010 3:07 PM

Smurfit-Stone Container Corp.'s $1.2 billion term loan to emerge from bankruptcy rose in its first day of trading, according to a person familiar with the matter.

The debt, sold to investors at a discount of 99 cents on the dollar, is trading at 99.375 cents, said the person, who declined to be identified because the transactions are private.

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JPMorgan Chase & Co., Deutsche Bank AG and Bank of America Corp. arranged the six-year loan, which pays an interest rate 4.75 percentage points more than the London interbank offered rate and has a 2 percent Libor floor, the person said Feb. 8. Libor is the rate banks charge to lend each other.

Mike Mullin, a spokesman for Smurfit-Stone, didn't immediately return a message left at his office.

The term loan has a so-called soft-call option. Under the proposed agreement Smurfit-Stone has to give lenders a 1 cent premium, or 101 cents on the dollar, if it repays the debt during the first two years, the person said earlier. The debt is covenant-lite, meaning that it will have no financial maintenance requirements.

Smurfit-Stone, the Chicago-based corrugated container and containerboard maker, filed for Chapter 11 protection with the U.S. Bankruptcy Court in Wilmington, Delaware, in January 2009 amid falling customer demand and heavy debt payments.

Judge Brendan Linehan Shannon approved a reorganization plan Jan. 29 that fully repays $969 million to secured lenders, by using cash or new debt, and issues new common stock to unsecured creditors that will be worth up to 71 percent of their $3.1 billion in claims.