Covanta Energy is in the market with JPMorgan to refinance its existing debt with a new $1.3 billion credit facility as part of its recapitalization plan. The deal comprises a five-year, $300 million revolver; a six-year, $680 million term loan and a six-year, $320 million funded letter of credit. The deal is priced at LIBOR plus 1 3/4%. The waste-to-energy company also has the ability to increase its borrowings by $400 million.
Fairfield, N.J-based Covanta is also planning a public offering of about $125 million of common stock and about $325 million of its convertible debentures. It also plans on repurchasing approximately $612 million of outstanding notes.
The unit of Danielson Holding Corp. tapped Goldman Sachs and Credit Suisse in June 2005 for $1.14 billion of financing to back its approximately $2 billion acquisition of American Ref-Fuel Holdings Corp. from DLJ Merchant Banking Partners and AIG Highstar Capital (LMW, 6/3/2005). That facility comprises a six-year, $100 million revolver; a seven-year, $340 million pre-funded letter of credit; a seven-year, $250 million term loan "B" and an eight-year, $450 million second lien. The first lien was expected to price around LIBOR plus 3%, while price talk on the second lien was around LIBOR plus 5%. Covanta added a $140 million tack-on to the term loan "B" last June, as well as a $229 million term loan "C" and a $320 million add-on to the letter of credit.
Moody's Investors Service rated the new credit Ba2 and assigned a B1 to Covanta's $325 million convertible debentures. The ratings agency says the new debt will be used to take out $627 million of outstanding debt under the existing facility. Calls to Elizabeth O'Melia, treasurer, were not returned.