Citgo upsizes term loans to $1.25 billion, adds call protection

By Sara Rosenberg

New York, June 14 - Citgo Petroleum Corp. increased the size of its five- and seven-year term loans and added call premiums to the tranches, according to sources.

The five-year term loan is now sized at $600 million, up from a most recent size of $500 million to $550 million, and the seven-year term loan is now sized at $650 million, up from a most recent size of $500 million, sources said.

Furthermore, the five-year loan now has call protection of 102 in years one and two, and 101 in year three, while the seven-year loan is now non-callable for two years, then at 102 in year three and 101 in year four, sources continued.

Pricing on the five-year term loan remained at Libor plus 600 bps, and pricing on the seven-year term loan remained at Libor plus 700 bps, with both tranches still carrying a 2% Libor floor and being offered at an original issue discount of 98.

Citgo's now $2 billion senior secured credit facility (Ba2/BB+/BB+) also includes a $750 million revolver priced at Libor plus 450 bps with a 62.5 bps unused fee. It is being offered at upfront fees ranging from 100 bps to 150 bps based on order size. The spread is determined by a ratings grid.

Last week, when the five-year term loan was upsized from $300 million and the seven-year term loan was added, the revolver was increased from $700 million with pricing flexing up from Libor plus 325 bps.

Price talk on the term loan when it was initially sized at $300 million had been Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 981/2.

BNP Paribas, RBS and UBS are the lead banks on the deal, with BNP the left lead.

Commitments are due from lenders on Thursday.

Proceeds from the credit facility and a $300 million secured notes offering that is being contemplated will be used to refinance existing debt. As a condition of the deal, the company must raise at least $1 billion between the term loans and the new bonds.

The notes were originally expected at $1.5 billion, but were downsized as a result of the increase in the amount of term loan debt.

In addition, there is still the possibility that the downsized notes offering may end up being rolled into the company's term loans, depending on how the bonds progress. The roadshow for the bonds began around mid-May, but pricing has yet to take place.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

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