Credit Lyonnais, U.S. Bank and Citibank have joined on the refinancing for Arch Coal and Arch Western Resources at the co-documentation level. J.P. Morgan and PNC Bank are leading the deal and a banker familiar with the syndication said J.P. Morgan has committed $70 million and PNC bank $90 million. Documentation agents have committed $60 million each to the deal. An additional commitment has been received from Bank of New York. The $525 million "B" has already gained more than $100 million after launching on March 5, with Van Kampen and IDM among the buyers.
The loan comprises a $350 million, five-year revolver for Arch Coal, which can be upsized to $400 million. The spread is LIBOR plus 1 3/4% based on a grid. At the Arch Western level, there is a five-year $150 million "A" term loan priced at 2 1/2% not on a grid, and the $525 million term loan "B" is also priced at LIBOR plus 2 1/2%. Early indications were the spread would be LIBOR plus 2 3/4% on the "B," but strong buyside interest produced the tighter spread, said the banker. The closing leverage is less than three times. Bankers expect the deal to do well, considering the BB profile of the credit and the paucity of new issuance for the buyside.
The credit refinances existing debt incurred during the merger with Ashland Coal in 1997 noted the banker. J.P. Morgan and PNC are relationship lenders to Arch. Company officials referred questions to the treasurer Jim Florczak, who did not return repeated calls.