MasTec gets new $700 million delayed-draw term loan, expands revolver

By Marisa Wong

Los Angeles, Sept. 1 – MasTec, Inc. entered into a new unsecured delayed-draw term loan agreement on Sept. 1 with Bank of America, NA as administrative agent. The agreement provides for $700 million of delayed-draw term loan commitments, composed of $400 million of three-year commitments and $300 million of five-year commitments, according to an 8-K filing with the Securities and Exchange Commission.

The term loan commitments may be drawn on the closing date of the company’s previously announced acquisition of Infrastructure and Energy Alternatives, Inc. and its subsidiaries.

The three-year tranche will mature on the three-year anniversary of the closing date of the merger, and the five-year tranche will mature on the five-year anniversary of the closing date.

Loans under the three-year tranche are not subject to amortization. Loans under the five-year tranche are subject to amortization in quarterly principal installments, beginning with the first full fiscal quarter ending after the one-year anniversary of the closing date, at the rate of 5% per annum, increasing to 10% per annum on the first full fiscal quarter ending after the third anniversary of the closing date until the maturity date of the five-year tranche.

Borrowings may be used to pay the consideration for the merger and to pay fees and expenses incurred in connection with the merger and related transactions.

The term loan commitments will be automatically and permanently terminated if the merger closing date does not occur.

Outstanding loans under the three-year tranche bear interest at term SOFR plus a margin of 112.5 basis points to 150 bps. Outstanding loans under the five-year tranche bear interest at term SOFR plus a margin of 125 bps to 162.5 bps. In each case, the applicable margin is based on the company’s consolidated leverage ratio and debt rating.

The company must also pay ticking fees to the lenders under the new term loan of 17.5 bps on any undrawn commitments under the three-year or five-year tranche.

The obligations under the term loan are not guaranteed and are not secured by any assets of the company or any of its subsidiaries.

The term loan requires the company to maintain a consolidated leverage ratio of not more than 3.50 as of the end of any fiscal quarter (subject to acquisition adjustment) and a consolidated interest coverage ratio of at least 3.00.

The company and subsidiary MasTec North America, Inc. are borrowers under the term loan.

BofA Securities, Inc., JPMorgan Chase Bank, NA, PNC Capital Markets LLC, Truist Securities, Inc. and U.S. Bank NA acted as joint lead arrangers and joint bookrunners for the new term loan.

JPMorgan, PNC Bank, NA, Truist Bank and U.S. Bank NA are co-syndication agents.

Revolver amendment

On Sept. 1, MasTec also amended its existing credit agreement dated Nov. 1, 2021 with Bank of America as administrative agent, swingline lender and a letter-of-credit issuer to increase the revolving borrowing commitments under the credit facility by $250 million to an aggregate amount of $1.9 billion, according to the 8-K filing.

The amendment, among other things, also released the existing guarantees under the credit facility and removed the requirement that some subsidiaries of the company guarantee the obligations under the facility.

In addition, under the terms of the indenture governing the company’s 4.5% senior notes due 2028, the existing guarantees of the 2028 notes were released substantially concurrently with the amendment to the credit facility.

MasTec and subsidiary MasTec North America are borrowers under the revolver.

BofA Securities and JPMorgan acted as joint lead arrangers and joint bookrunners for the amendment.

Coral Gables, Fla.-based MasTec is an infrastructure construction company.

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