Midcoast launches $400 million term loan at Libor plus 500-525 bps

By Sara Rosenberg

New York, July 26 – Midcoast (East Texas) LLC launched on its call on Monday a $400 million seven-year senior secured term loan B that is talked at Libor plus 500 basis points to 525 bps with a 0.75% 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 1.1x debt service coverage ratio covenant, the source said.

Excess cash flow sweep is 100% if consolidated total net leverage is more than 5x, 75% if consolidated total net leverage is more than 3x and 50% if consolidated total net leverage is 3x or lower.

Debt service reserve account is six months interest plus amortization.

The loan does not have an incremental.

Security is a perfected first priority lien on substantially all tangible and intangible assets and capital stock of the borrower and guarantors.

Expected ratings are B2/B.

Citigroup Global Markets Inc., ING and Investec are the joint lead arrangers on the deal. Citi is the agent.

Commitments are due at 5 p.m. ET on Aug. 5, the source added.

Proceeds will be used to repay an existing term loan and fund a shareholder distribution.

Closing is expected in mid-August.

Midcoast, a portfolio company of ArcLight Capital Partners, is a provider of midstream services.

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