The Distressed Debt Report - March 7, 2006

Antares Unit Pushing Asset-Based Loans to PE Firms

GE Antares Capital, General Electric’s $8 billion lending arm that serves private equity firms, recently formed a new unit to pursue a novel strategy of offering asset-based loans to private equity sponsors. Other market players said they don’t foresee a significant shift away from the cash flow based loans which are much more favored by PE firms anytime soon. Full Story

Second Lienholders Look for Seniors to Give Up Some Rights

Second lien lenders to bankrupt Meridian Automotive Systems are pushing for first lien lenders to give up rights to some of their collateral to help the car parts supplier obtain new financing. The proposal is being pushed by hedge fund Stanfield Capital Partners and other lenders who hold both second lien debt and a majority of Meridian’s first lien debt. Debtholders who hold a minority position in the first lien debt and no second lien debt are opposing the concession. Full Story

CapitalSource Accused of Bleeding Company with Forbearance Fees

Holders of more than $17 million in unsecured notes may try to block publicly traded finance company CapitalSource from collecting on loan forbearance fees that may have driven embattled medical staffing firm World Health Alternatives deeper into bankruptcy. Full Story

• Bear, Churchill Start Middle Market Finance Company
• Allied Capital Providing $99.2M for ChemPro Acquisition
• Snowbird Lets Borrowers Take Back Equity Through 'Reversible Warrants'
• Monroe Loans $26.5M for Cordova Purchase of Blanket Company
• Patriot Capital Provides $13.5M for Innovative Concepts Refinancing
• Hercules Commits to $8M in Debt for Market Force
• Events
• Hirings and Firings

GE Antares Capital and other lenders who anticipate a downturn in the credit cycle may be influenced by information such as Moody’s Investors Service’s February report on loan defaults. The report shows that lenders may be recovering less in defaults on loans that Moody’s rates as speculative grade (from “Ba1” to “C”). Full Story