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Lackawanna launches $475 million of term loans at SOFR plus 500 bps
By Sara Rosenberg
New York, July 5 – Lackawanna Energy Center LLC launched on Wednesday its $380 million six-year term loan B-2 and a $95 million six-year term loan C with price talk of SOFR plus 500 basis points with a 0.5% floor and an original issue discount of 97, according to a market source.
The term loan B-2 and term loan C, which are being sold as a strip, have 101 soft call protection for six months and amortization of 1% per annum, the source said.
In addition, the loans have a six-month debt service reserve account, a 75% excess cash flow sweep and a 1.1x debt service coverage ratio covenant.
Expected ratings are Ba3/BB-.
The company’s $945 million of senior secured credit facilities also include a $120 million revolver, and a $350 million privately placed term loan B-1 priced at a fixed-rate of 9.5%.
The term loan B-1 is non-callable for two years, then at 101 in year three.
Morgan Stanley Senior Funding Inc., BMO Capital Markets, BNP Paribas Securities Corp. and MUFG are the bookrunners on the deal.
Commitments are due on July 19, the source added.
Proceeds from the term loan B will be used to repay the existing debt of the company and the holding company, the term loan C will be used to fund a collateral account to cash collateralize the issuance of letters of credit, and the revolver will fund various short-term working capital requirements and repay an existing working capital loan.
Lackawanna is a 1,483MW combined-cycle natural gas-fired power plant located in Jessup, Pa., in the MAAC sub-region of PJM. The project was developed by Invenergy and has a partnership with Blackrock Global Infrastructure Funds.
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