Dynegy reveals price talk on $1.7 billion senior secured term loans

By Sara Rosenberg

New York, July 12 - Dynegy Inc. announced price talk on its $1.7 billion of new senior secured term loans a day after the deal's Monday bank meeting, according to a market source.

The $1.3 billion six-year term loan (B2) at GasCo is being talked at Libor plus 650 basis points with a 1.5% Libor floor and an original issue discount of 99, and the $400 million six-year term loan at CoalCo is being talked at Libor plus 775 bps with a 1.5% Libor floor and an original issue discount of 98, the source said.

The GasCo loan has call protection of 103 in year one, 102 in year two and 101 in year three, and the CoalCo loan is non-callable for two years, then at 102 in year three and 101 in year four.

Commitments are due on July 22.

Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are the joint lead arrangers on the deal, and Barclays Capital Inc. is a co-manager.

Through a concurrent reorganization, GasCo will be a subsidiary that owns a portfolio of eight primarily natural gas-fired intermediate and peaking power generation facilities, and CoalCo will be a subsidiary that owns a portfolio of six primarily coal-fired baseload power generation facilities.

The reorganization is being done to align the company's asset base and maximize flexibility to address additional potential debt restructuring activities.

Proceeds from the GasCo loan will be used to repay Dynegy Holdings Inc.'s existing senior secured credit facility, repay existing debt relating to Sithe Energies Inc., make a $400 million restricted payment to a parent holding company of GasCo, and fund cash collateralized letters of credit and cash collateral for existing collateral requirements.

The CoalCo loan will be used to fund cash collateralized letters of credit and cash collateral for existing collateral requirements, and for general working capital and general corporate purposes.

Closing on the term loans is expected at the end of this month.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

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