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Kerr-McGee sets price talk on $5 billion credit facility
By Sara Rosenberg
New York, April 19 - Kerr-McGee Corp. came out with price talk on its $5 billion senior secured credit facility as the deal launched via a bank meeting Tuesday, according to a market source.
The $2 billion senior secured six-year term loan B is talked at Libor plus 200 basis points, the $2 billion senior secured two-year term loan X is talked at Libor plus 175 basis points and the $1 billion senior secured five-year revolver is talked at Libor plus 175 basis points, the source said.
JPMorgan and Lehman Brothers are the lead banks on the deal, with JPMorgan the left lead.
The company has also received a commitment for a $1 billion unsecured interim facility from the same two banks.
Security for the credit facility is basically a perfected first priority interest in all tangible and intangible U.S. assets and all of the capital stock of direct and indirect subsidiaries.
Proceeds will be used to refinance debt, finance a $4 billion modified "Dutch Auction" self tender offer for shares of the company's common stock that was announced last Thursday and for general corporate purposes.
As a result of the company's self tender offer and financing needs, all three rating agencies downgraded Kerr-McGee's secured debt ratings - Moody's Investors Service to Ba3, Standard & Poor's to BB+ and Fitch Ratings to BB.
Under the tender offer, the company will buy back up to $4 billion of its common stock at a price not less than $85 per share or more than $92 per share. The tender offer is expected to commence on or about April 18.
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company.
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