Krotz raises pricing on $295 million institutional debt to Libor plus 750 bps

By Sara Rosenberg

New York, June 23 - Krotz Springs flexed pricing higher on its $295 million of institutional bank debt to Libor plus 750 basis points from Libor plus 550 bps, according to a market source.

The debt still has a 3.25% Libor floor, is being offered at an original issue discount of 96 and is non-callable for one year, then at 101 in year two, the source said. The discount was revised earlier in the syndication process from 98.

Tranching on the debt is comprised of a $245 million six-year first-lien term loan (B1/B+) and a $50 million letter-of-credit facility (B1/B+) to support substantial hedging.

Krotz Springs' $720 million credit facility also includes a $425 million ABL revolver.

Credit Suisse is arranging the term loan and letter-of-credit facility, and Wachovia provided the revolver commitment.

Proceeds will be used to help fund Alon USA Energy, Inc.'s acquisition of the Krotz refinery from Valero Energy Corp. for $333 million in cash plus an amount for working capital, including inventories, to be determined at closing. The equity contribution for the deal totals $105 million.

The credit facility is non-recourse to Alon.

There is a 100% cash flow sweep feature under the credit facility.

The revolver, which has a $75 million accordion feature, will be used to support working capital needs.

Total leverage at Krotz (opco debt) will be 0.9 times.

The transaction is expected to close during the latter portion of the second quarter or early in the third quarter, following satisfaction of customary conditions, including regulatory approvals.

Krotz Springs is an 85,000 barrel-per-day refinery located in Louisiana. Alon is a Dallas-based refiner and marketer of petroleum products.

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