Consolidated Energy updates $745 million term loan B pricing

By Sara Rosenberg

New York, Feb. 8 – Consolidated Energy Finance SA set pricing on its $745 million senior secured 6.75-year first-lien term loan B (Ba3/BB-/BB+) at SOFR plus 450 basis points, the high end of the SOFR plus 425 bps to 450 bps talk, according to a market source.

Also, the original issue discount talk on the term loan was revised to a range of 97 to 98 from just 98, and then finalized the discount at 97 following the 2 p.m. ET on Thursday commitment deadline, and the 101 soft call protection was extended to one year from six months, the source said.

In addition, MFN was changed to remove the carve-out for fixed-rate loans and the carve-out related to maturity of incremental loans, the basket under investments by MHTL in non-loan parties was reduced to $50 million from $70 million, and the J Crew protections were expanded to account for all material assets rather than just material IP.

Restricted payments were modified to reset the CNI builder basket to the closing date of this financing/set at $0, versus July 2021 start date/$294 million starting amount, reduce the general restricted payments basket to $100 million/1.8% total assets from $140 million/2.5% total assets, and remove the carve-out for distribution of shares of stock held by unrestricted subsidiaries.

Furthermore, the springing guaranty to term loan B/notes condition for capital markets debt was reduced to $50 million from $140 million, and EBITDA definition was revised to add a cap on pro forma adjustments to EBITDA at 20% of EBITDA and reduce the look-forward period to 18 months from 24 months.

Permitted investments was changed to reduce the investment in joint venture’s basket to $200 million/3.6% total assets from $250 million/4.5% total assets, reduce the investment in unrestricted subsidiaries basket to $100 million/1.8% total assets from $140 million/2.5% total assets, reduce the general investment basket to $200 million/3.6% total assets from $250 million/4.5% total assets, and remove the investment in permitted businesses basket.

Lastly, excluded contribution (available for investments) was revised to reduce excluded contribution to $175 million from $250 million, add stipulations that the basket is not available until the loan to Proman on the closing date is repaid with cash and use of this basket cannot be re-classified to other investment or restricted payments baskets, and once the upstream loan has been repaid above and beyond $75 million, CEL would refresh capacity dollar for dollar, up to a total cap of $175 million, the source continued.

The term loan still has a 0% floor, 0 bps CSA and a springing maturity three months ahead of senior notes due 2028.

Morgan Stanley Senior Funding Inc., Santander, ADCB and SMBC are the bookrunners on the deal. Morgan Stanley is the administrative agent on the deal.

Proceeds will be used with $605 million of senior notes, upsized from $580 million, to refinance bridge facilities used in part to finance an acquisition of a majority stake in OMC, to refinance an existing term loan B due 2025, to reduce debt at Proman AG and for general corporate purposes.

Closing is expected in mid-February.

Consolidated Energy is an acquirer and developer of companies that focus on alternative waste management and energy production.

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