EnergySolutions seeks to amend loans on merging with Energy Capital

By Marisa Wong

Madison, Wis., Feb. 11 - EnergySolutions, Inc. said it is in discussions with lenders under its credit agreement dated Aug. 23, 2010, as well as administrative agent JPMorgan Chase Bank, NA, regarding loan amendments.

The company is seeking to amend its credit agreement in connection with its acquisition by affiliates of Energy Capital Partners II, LLC, according to an 8-K filing with the Securities and Exchange Commission and a lender presentation dated Feb. 11.

Specifically, the company wants to amend the credit agreement's definition of change of control to mean that Energy Capital or its affiliates fail to own at least 50% of the voting power and equity value represented by outstanding equity interests.

The company is also proposing to amend reporting requirements so that annual and quarterly financials will be provided within 120 and 45 days, respectively, and will not be subject to timing requirements under SEC regulations.

In addition, the company wants lenders to

• Consent to the merger and related transactions so that the merger will not constitute a change of control under the credit agreement;

• Provide a waiver of the change-of-control provisions and some other covenants and provisions under the agreement, including the company's senior secured revolving credit facility and senior secured term loan;

• Consent to any repayment of the company's 10¾% senior notes due 2018, provided that any payments are funded from equity contributions made by Energy Capital or its affiliates;

• Allow it to extend the maturity date of its senior secured revolving credit facility; and

• Consent to a 1% prepayment premium if any senior secured term loans are refinanced prior to the one-year anniversary of the execution date of the proposed amendment.

In exchange for consenting to the changes

• Lenders will receive a 100 basis points consent fee with 50 bps payable on the date the amendment is executed and 50 bps payable on the amendment effective date;

• There will be a 50 bps increase in the applicable margin for the term loan B beginning on the amendment effective date;

• The company will reduce its debt, including its senior secured term loans and 10¾% senior notes, to $675 million or less within 150 days after the merger closes; and

• A 101 soft call will apply for 12 months from the amendment execution date.

According to the lender presentation, the company scheduled a lender call for Monday. Consents from lenders are due on Feb. 15, and the amendments are expected to become effective Feb. 19.

Energy Capital's acquisition of EnergySolutions is subject to shareholder and Nuclear Regulatory Commission approval.

EnergySolutions' existing senior credit facility currently consists of a $105 million revolver and a $527 million term loan B.

The nuclear waste company is based in Salt Lake City.

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