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Arch Coal readies launch of $3.8 billion bridge loan for Tuesday
By Sara Rosenberg
New York, May 23 - Arch Coal Inc. will hold a call at 11 a.m. ET on Tuesday to launch its $3.8 billion one-year bridge loan, according to a market source.
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.
Official price talk is not out yet. According to filings with the Securities and Exchange Commission, however, the loan is expected at Libor plus 600 basis points, increasing by 50 bps after three months and every three months thereafter, with a 1.25% Libor floor.
Commitments will be due at the end of the week.
Upon announcing its bridge loan plans earlier this month, the company had said that it would replace the debt with new senior unsecured notes, a senior secured revolving credit facility and equity.
Arch Coal already launched its proposed $1.75 billion revolver with a bank meeting on May 11.
PNC and Morgan Stanley are leading the revolver, with PNC the left lead.
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.
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