Arch Coal reveals bridge loan commitment size at $3.8 billion

By Sara Rosenberg

New York, May 3 - Arch Coal Inc.'s commitment for a one-year bridge loan is sized at $3.8 billion, with the plan being that the bridge will be replaced with new senior unsecured notes, a senior secured revolving credit facility and equity, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Morgan Stanley & Co. Inc. and PNC Capital Markets LLC are the joint lead arrangers and bookrunners on the bridge loan, with Morgan Stanley on the left.

Pricing on the bridge loan is Libor plus 600 basis points, increasing by 50 bps after three months and every three months thereafter. There is a 1.25% Libor floor.

As for the revolver, the company had said in a conference call on Monday that it expects its new facility to total $1.5 billion. The 8-K filing, however, explained that the company is considering amending and restating its existing revolver for which PNC Bank is the administrative agent. If the amendment and restatement is not completed, Arch Coal has the option to enter into a new $760 million senior secured revolver that has been committed by PNC Capital Markets LLC and Morgan Stanley & Co. Inc.

Pricing on the new $760 million five-year revolver is expected to range from Libor plus 175 basis points to 300 bps, and the commitment fee is expected to range from 37.5 bps to 50 bps based on leverage. The initial commitment fee is anticipated to be 50 bps.

The new revolver would have a $250 million accordion feature, and covenants would include minimum interest coverage, maximum total leverage and maximum senior secured leverage ratios.

Proceeds from the financings will be used to fund the acquisition of International Coal Group Inc. for $14.60 per share in an all-cash transaction valued at $3.4 billion.

Based on pro forma 2010 financial results, the combined company would have $4.3 billion of revenues and $925 million of adjusted EBITDA.

Closing is expected in the second quarter, subject to the tender of a majority of International Coal's shares and regulatory approvals. The tender offer for International Coal's shares is expected to begin around mid-May.

St. Louis-based Arch Coal and Scott Depot, W.Va.-based International Coal are coal producers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.