CF Industries up to $2.3 billion credit facility to launch on Monday

By Sara Rosenberg

New York, March 26 - CF Industries Holdings Inc. is scheduled to hold a bank meeting on Monday to launch its proposed up to $2.3 billion credit facility, according to a market source.

Morgan Stanley and the Bank of Tokyo-Mitsubishi UFJ are the lead banks on the deal, with Morgan Stanley the administrative agent.

The facility consists of an up to $2 billion five-year term loan B and a $300 million five-year revolver, with both tranches expected to be priced at Libor plus 350 basis points with a 2% Libor floor and an original issue discount of 981/2, according to recent filings with the Securities and Exchange Commission.

The revolver has a 75 bps commitment fee, and the term loan has a 75 bps ticking fee.

Financial covenants include a minimum interest coverage ratio and a maximum leverage ratio.

Proceeds will be used to help fund the acquisition of Terra Industries Inc. for $37.15 in cash and 0.0953 of a share of its common stock per Terra share.

The transaction has a total value of $4.7 billion.

CF Industries actually commenced an exchange offer for Terra's shares on March 5, and under the definitive agreement, that offer will expire on April 2.

In addition to the credit facility, CF Industries has also received a commitment for an up to $1.75 billion one-year bridge loan priced initially at Libor plus 800 bps with a 2% Libor floor. After 30 days, the spread will increase by 100 bps, and by an additional 100 bps each 30 days thereafter.

The company plans to do a roughly $1 billion shares offering to reduce amounts under the bridge loan and/or the term loan B, and the company may sell senior unsecured notes to refinance the bridge loan as well.

Morgan Stanley is the lead arranger and bookrunner on the bridge loan.

Specifically, proceeds from the term loan B and the bridge loan will be used to fund the cash portion of the consideration to be paid to Terra's stockholders, to repay any outstanding amounts under CF Holdings' existing credit facility and to repurchase Terra's existing notes.

The revolver will be used for general corporate purposes.

CF Industries is a Deerfield, Ill.-based producer and distributor of nitrogen and phosphate fertilizer products. Terra is a Sioux City, Iowa-based producer and marketer of nitrogen and methanol products.

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