Peabody cuts spread on $950 million term loan to Libor plus 450 bps

By Sara Rosenberg

New York, Feb. 7 – Peabody Energy Corp. reduced pricing on its $950 million five-year covenant-light first-lien senior secured term loan (Ba3) to Libor plus 450 basis points from Libor plus 525 bps, according to a market source.

Also, the original issue discount on the term loan was tightened to 99.5 from 98.5, the source said.

The term loan still has a 1% Libor floor, 101 hard call protection for one year and amortization of 1% per annum.

Included in the term loan is a ticking fee of half the margin from days 32 to 61, the full margin from days 62 to 121 and the full margin plus the floor thereafter.

Earlier in syndication, the term loan was upsized from $500 million.

Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Macquarie Capital (USA) Inc. are the leads on the deal.

Commitments were due at the close of business on Tuesday, the source added.

Proceeds will be used to help refinance existing debt in connection with the company’s exit from bankruptcy.

The company also plans on getting $1 billion in first-lien exit notes for the refinancing and $3.1 billion of total equity.

Due to the recent first-lien term loan upsizing, the company will no longer be getting $450 million in second-lien notes from existing second-lien noteholders with its restructuring.

Closing is expected in early April.

Peabody is a St. Louis-based coal producer. The company filed bankruptcy on April 13, 2016 in the U.S. Bankruptcy Court for the Eastern District of Missouri, and the Chapter 11 case number is 16-42529.

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