Lonestar II Generation launches $56 million of incremental term loans

By Sara Rosenberg

New York, Feb. 3 – Lonestar II Generation Holdings LLC held a lender call at 2 p.m. ET on Monday to launch $56 million of incremental senior secured term loans, according to a market source.

Morgan Stanley Senior Funding Inc. is the bookrunner on the deal.

The debt consists of a $50 million incremental covenant-lite term loan B due April 18, 2026 and a $6 million incremental covenant-lite term loan C due April 18, 2026, the source said.

Price talk on the term loans is Libor plus 500 basis points with a 0% Libor floor and an original issue discount of 99 to 99.5.

The term loans have 101 soft call protection for six months, amortization of 1% per annum, an excess cash flow sweep of 100% for life and a six-month debt service reserve account requirement.

Commitments are due at 5 p.m. ET on Thursday, the source added.

Proceeds will be used to fund a cash collateralized letter of credit account, fund a distribution to the Lonestar Generation LLC balance sheet, and pay transaction fees and expenses.

Consenting lenders are being offered a 25 bps fee.

Pro forma for the transaction, the term loan B will be sized at $299 million and the term loan C will be sized at $36 million.

Lonestar II Generation is the owner of a roughly 1.1 GW portfolio of three thermal power generation assets located in Texas and serving the ERCOT market.

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