Spark Energy new credit facility’s interest up to Libor plus 300 bps

By Wendy Van Sickle

Columbus, Ohio, May 24 – Spark Energy, Inc.’s new $120 million senior secured borrowing base revolving credit facility includes a $30 million bridge-loan subfacility to cover up to 75% of the cost of its acquisition of Verde Energy, according to details contained in an 8-K filing with the Securities and Exchange Commission.

There is also a $72 million sublimit for letters of credit with terms of 90 days to 365 days and an $85 million sublimit for working capital advances and general corporate purposes.

There is a $30 million accordion.

Borrowings bear interest at Libor plus 275 basis points if the average daily usage of the credit facility for the most recently ended quarter was less than 50% or Libor plus 300 bps otherwise. There is an annual commitment fee of 5 bps.

The credit facility will mature on May 19, 2019, but borrowings under the bridge loan sublimit are to be repaid at 25% to year with the remainder due at maturity.

The new credit facility replaces the existing $107.5 million senior secured credit facility due July 2017, as previously reported.

The new larger facility will include Verde Energy as a co-borrower upon the closing of that transaction in the coming months.

Cooperatieve Rabobank UA, New York Branch acted as joint lead arranger, bookrunner and administrative agent. BBVA Compass acted as joint lead arranger and syndication agent.

The borrowing base is calculated mostly based on 80% to 90% of the value of eligible accounts receivable and unbilled product sales and inventory and other working capital assets.

The company must maintain a minimum fixed-charge coverage ratio of 1.25 to 1 and a maximum total leverage ratio of 2.00 to 1.

“This new larger facility has additional features and flexibility that will better support our continued growth initiatives and provides increased financial flexibility to capitalize on opportunities to enhance shareholder value,” Nathan Kroeker, Spark’s president and chief executive officer, said in a news release.

Spark Energy is an independent retail energy services company based in Houston.

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