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BLOOMBERG - Walter Energy Inc., a southern Appalachia producer of steelmaking coal, is seeking $2.725 billion in bank loans to help pay for its acquisition of Canada's Western Coal Corp. and to refinance debt.
The package will include a $600 million five-year term loan A, a $1.75 billion seven-year term loan B and a $375 million five-year revolving line of credit, the Tampa, Florida-based company said in a regulatory filing dated Dec. 2.
Morgan Stanley, Credit Agricole SA and Bank of Nova Scotia have committed to provide the financing, according to the filing.
The interest rate on all three loans will be 3.5 percentage points more than the London interbank offered rate provided the corporate family rating is at least Ba3 from Moody's Investors Service and BB- from Standard & Poor's, with a stable outlook, according to the filing. Should the rankings fall below those levels, the interest rate will be 3.75 percentage points more than Libor. The term loan B will have a 1.5 percent floor on the lending benchmark.
The interest rates on the term loan A and the revolver will be based on a leverage-based grid, according to the filing. The unused amount of the commitments under the revolver will be charged 50 basis points. A basis point is 0.01 percentage point.
Walter Energy agreed to buy Western Coal for C$3.3 billion ($3.3 billion) to add reserves and boost production of the commodity as prices rise. Walter Energy offered Western Coal C$11.50 a share in cash, or 0.114 of a Walter Energy share, the companies said Dec. 3 in a joint statement.
To contact the reporter on this story: Richard Bravo in New York at [email protected].
To contact the editor responsible for this story: Faris Khan at [email protected].
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