Covanta reveals price talk on $1.2 billion credit facility with launch

By Sara Rosenberg

New York, March 8 - Covanta Energy Corp. came out with price talk on its $1.2 billion credit facility (Ba1/BB+/BB+) in connection with its bank meeting on Thursday, according to market sources.

The $900 million five-year revolver is talked initially at Libor plus 225 basis points with a 50 bps unused fee, sources said. Pricing can range from Libor plus 200 bps to 275 bps based on leverage.

The $300 million seven-year term loan B is talked at Libor plus 300 bps with a 1% Libor floor and an original issue discount of 99 to 991/2, sources added.

Covenants include a leverage ratio of 4 times and an interest coverage ratio of 3 times.

There is a $500 million accordion feature.

Commitments toward the term loan B are due on March 16.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, Barclays Capital Inc., Credit Agricole Securities (USA) Inc. and J.P. Morgan Securities LLC are the lead banks on the deal.

Proceeds will be used to refinance an existing credit facility.

Also on Thursday, the company priced $400 million of senior notes at par to yield 6 3/8%, with proceeds earmarked for the repayment of existing term loan borrowings.

Covanta is a Morristown, N.J.-based owner and operator of energy-from-waste and power generation projects.

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