Foresight Energy lifts term loan to $825 million with bond downsizing

By Sara Rosenberg

New York, March 16 – Foresight Energy LLC upsized its five-year first-lien term loan to $825 million from $750 million as its bond offering was scaled back to $425 million from $500 million, according to a market source.

Also, the secured leverage ratio test for additional parity lien debt in the permitted lien clause was changed to 3.75 times from 4.25 times, and a covenant was added that prohibits Hillsboro, Patton or any of their subsidiaries, at any time when they are unrestricted subsidiaries, from distributing insurance proceeds relating to Deer Run to anyone other than the issuer or a restricted subsidiary, the source said.

Pricing on the term loan is still Libor plus 575 basis points with a 1% Libor floor and an original issue discount of 98.5.

On Wednesday, the spread on the term loan firmed at the high end of the Libor plus 550 bps to 575 bps talk and the discount widened from 99.

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

The company’s now $995 million senior secured credit facility, up from $920 million, also includes a $170 million revolver.

Goldman Sachs Bank USA, Huntington, Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. are the leads on the deal.

Recommitments were scheduled to be due at 5 p.m. ET on Thursday, the source added.

Proceeds will be used with the bonds to help refinance about $349 million in second-lien senior secured PIK notes due 2021, about $300 million in second-lien senior secured exchangeable PIK notes due 2017 and existing credit facilities, including the roughly $353 million outstanding under the revolver and the roughly $296 million term loan.

Other funds for the transaction will come from about $78 million of cash on hand.

In connection with the refinancing, Murray Energy Corp. intends to contribute to Foresight Energy about $60.6 million in cash in the form of common equity.

Also, Murray Energy is expected to exercise its option to acquire an additional 46% voting interest in Foresight Energy GP LLC, increasing its voting interest to 80%.

Foresight Energy is a St. Louis-based producer and marketer of thermal coal.

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