Compass Power launches $700 million term loan B at Libor plus 400 bps

By Sara Rosenberg

New York, Dec. 1 – Compass Power Generation LLC launched on Friday its $700 million seven-year term loan B with price talk of Libor plus 400 basis points with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan has 101 soft call protection for six months, amortization of 1% per annum and a 1.1 times debt service coverage ratio covenant, the source said.

The loan also has an excess cash flow sweep of the greater of 75% and the amount required to reach the target debt balance.

The company’s $760 million of senior secured credit facilities (BB-) include a $60 million revolver as well.

Morgan Stanley Senior Funding Inc. and MUFG are the joint lead arrangers on the deal, and Credit Agricole CIB and SunTrust Robinson Humphrey Inc. are co-managers.

Commitments are due on Dec. 14, the source added.

Proceeds will be used to refinance existing debt, fund a distribution to Starwood Energy Group, fund a capital expenditure reserve and pay transaction costs.

Compass Power Generation, a Starwood Energy Group portfolio company, is a 1.2 GW natural gas power portfolio.

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