Walter Energy $2.725 billion facility expected as early 2011 business

By Sara Rosenberg

New York, Dec. 8 - Walter Energy Inc.'s proposed $2.725 billion senior secured credit facility is expected to come to market sometime early on in 2011, with January the likely month for the launch to take place, a market source told Prospect News.

The facility consists of a $375 million five-year revolver, a $600 million five-year term loan A and a $1.75 billion seven-year term loan B.

Pricing on the facility is expected at Libor plus 350 basis points if corporate ratings are Ba3/BB-, and Libor plus 375 bps if the ratings are lower, according to an 8-K recently filed with the Securities and Exchange Commission.

The term loan B is expected to have a 1.5% Libor floor and the revolver has a 50 bps unused fee.

Amortization on the term loan A is $30 million in year one, $60 million in year two, $90 million in year three, $120 million in year four and $300 million in year six, while amortization on the term loan B is 1% per year with the balance due at maturity.

Financial covenants include a minimum interest coverage ratio and a maximum leverage ratio.

Morgan Stanley, Credit Agricole and the Bank of Nova Scotia are the lead arrangers on the deal, with Morgan Stanley the administrative agent.

Proceeds will be used to help fund the acquisition of Western Coal Corp. for C$11.50 per share, to refinance existing debt and for working capital.

Walter Energy is a Tampa, Fla.-based producer and exporter of metallurgical coal for the steel industry. Western Coal is a Vancouver, B.C.-based producer of metallurgical coal.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.