Parkway talks $1.14 billion of term loans at Libor plus 450-475 bps

By Sara Rosenberg

New York, Oct. 27 – Parkway Generation LLC launched on Wednesday its $1.14 billion of seven-year senior secured term loans (BB) with price talk of Libor plus 450 basis points to 475 bps with a 0.75% Libor floor and an original issue discount of 99, according to a market source.

The term loan debt, split between a $1 billion term loan B and a $140 million term loan C, has 101 soft call protection for six months, a 1.1x debt service coverage ratio covenant and a six-month debt service reserve account, the source said.

Amortization on the term loan B is 1% per annum. The term loan C has no amortization.

Cash sweep is 75%, stepping down to 50% at 3x consolidated total net leverage.

Morgan Stanley Senior Funding Inc., Jefferies LLC, BNP Paribas Securities Corp. and Goldman Sachs Bank USA are the joint lead arrangers and bookrunners on the deal.

Commitments are due at noon ET on Nov. 5, the source added.

Proceeds from the term loan B will be used to help fund ArcLight Capital Partners’ acquisition of Public Service Enterprise Group Inc.’s portfolio of eight natural gas-fired power generation facilities in New Jersey and Maryland totaling 4,805 MW (Parkway Generation), and the term loan C will be used to fund a collateral account to cash collateralize the issuance of letters of credit.

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