Atlantic Power launches $700 million term B at Libor plus 450-475 bps

By Sara Rosenberg

New York, March 23 – Atlantic Power LP (APLP Holdings LP) launched on Wednesday its $700 million seven-year term loan B with price talk of Libor plus 450 basis points to 475 bps with a 1% Libor floor and an original issue discount of 98, according to a market source.

The term loan has 101 soft call protection for one year and amortization of 1% per annum.

The company’s $910 million senior secured credit facility also provides for a $210 million five-year revolver.

Covenants include a maximum leverage ratio of total debt to project adjusted EBITDA and a minimum interest coverage ratio of project adjusted EBITDA to cash interest expense.

The facility has a six-month debt service reserve, a 50% excess cash flow sweep and mandatory prepayments from proceeds of asset sales, insurance proceeds and incurrence of debt, in each case subject to applicable thresholds and customary carve-outs.

There is a $120 million incremental term loan allowance, which may be used to repay debt and/or for general working capital purposes.

Security for the credit facility is a first-lien on 16 of the 17 APLP projects, a pledge of the equity interest in the remaining APLP project, and a pledge of equity interests in five newly contributed projects at Atlantic Power Transmission Inc. and Atlantic Power Generation Inc.

The deal is expected to have a low-BB type profile.

Commitments are due on April 5, the source added.

Goldman Sachs Lending Partners LLC and Bank of America Merrill Lynch are the joint bookrunners on the deal and joint lead arrangers with RBC Capital Markets LLC, MUFG and Wells Fargo Securities LLC.

Proceeds will be used to refinance an existing roughly $473 million term loan and $210 million revolver, to redeem C$67.3 million 6.25% convertible debentures due in March 2017 and C$75.8 million 5.6% convertible debentures due in June 2017, to fund other potential initiatives to reshape the company’s capital structure, and for general corporate purposes.

Closing is subject to syndication, the conclusion of negotiations, execution of definitive documentation, receipt of requisite approvals and satisfaction of customary conditions.

Atlantic Power is a Dedham, Mass.-based owner and operator of power generation assets.

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