Southwestern Energy reveals interest rate, fees on bridge loan

By Angela McDaniels

Tacoma, Wash., Oct. 17 – Southwestern Energy Co. gave more details about its $5 billion 364-day senior bridge loan in an 8-K filing with the Securities and Exchange Commission on Friday.

Depending on the company’s ratings, the interest rate will be Libor plus 125 basis points to 175 bps from the closing date of the bridge loan through the 89th day after closing, Libor plus 150 bps to 200 bps on days 90 through 179, Libor plus 175 bps to 225 bps on days 180 through 269 and Libor plus 200 bps to 250 bps from day 270 onward.

The company will pay a duration fee of 0.5% of the principal amount of loans outstanding on day 90, 0.75% on day 180 and 1% on day 270.

The company will also pay an undrawn fee at closing or upon the termination or expiration of the commitments, whichever is sooner. The fee is equal to 0.2% of the undrawn portion of the commitments on that date.

The commitments for the bridge loan will expire on the earliest of (a) March 15, (b) the closing of the acquisition or the execution of the credit documentation for the bridge loan, (c) the date that the acquisition agreement is terminated or expires and (d) the day the company chooses to terminate the bridge loan.

Bank of America, NA is the administrative agent, and Bank of America Merrill Lynch is the arranger and bookrunner.

As previously reported, the company will use the bridge loan and its existing revolving credit facility to fund the acquisition of oil and gas assets in West Virginia and Pennsylvania from Chesapeake Energy Corp. for $5.38 billion, subject to adjustments.

Southwestern Energy expects to replace or refinance some or all of the bridge loan with an offering of senior notes and the issuance of equity or equity-linked securities.

The acquisition is expected to close by year’s end.

Southwestern Energy is a Houston-based oil and gas company. Chesapeake is an Oklahoma City-based developer of unconventional resources.

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