Constar sees closing on $75 million second lien term loan by the end of December

By Sara Rosenberg

New York, Dec. 12 - Constar International Inc. anticipates closing on a new $75 million second lien term loan to refinance existing debt by the end of December, according to a filing with the Securities and Exchange Commission.

More specifically, net proceeds from the loan would be used to prepay about $25 million of the existing term loan B and $45 million of the revolver.

The expectation for completion by the end of December is "based on nonbinding indications of interest from prospective lenders," the filing added.

In November, Constar amended its credit agreement to allow the company to either obtain a second lien term loan of between $50 and $75 million or issue between $50 and $150 million of second lien bonds.

Also, the mandatory pre-payment terms were modified to allow the company to use proceeds from the proposed financing to pre-pay the term loan and repay outstandings on the revolver while permanently reducing the revolver commitments by up to $10 million.

The amendments also revised financial covenants, putting the company back in compliance with the revised third-quarter financial covenants.

The amendment changed financial covenants from Sept. 30, 2003 through June 30, 2005, including the minimum EBITDA requirement, the maximum senior leverage requirement, the minimum interest coverage requirement and the maximum capital expenditures requirement.

Constar is a Philadelphia producer of polyethylene terephthalate plastic containers for food and beverages.

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