Walter Energy $2.725 billion facility to launch to SMAs on Thursday

By Sara Rosenberg

New York, Jan. 14 - Walter Energy Inc. is set to hold a senior managing agent bank meeting on Thursday for its proposed $2.725 billion senior secured credit facility, according to a market source.

Timing on a retail bank meeting for the deal is still to be determined, the source said.

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

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.

Official price talk on the deal is not yet available, the source added.

However, filings with the Securities and Exchange Commission had previously outlined pricing on the facility at Libor plus 350 basis points if corporate ratings are Ba3/BB-, and Libor plus 375 bps if the ratings are lower.

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

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

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.

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