KGen Partners has turned to Morgan Stanley for a new $400 million credit to refinance existing debt put in place in 2005. Credit Suisse led the previous deal. KGen is owned by MatlinPatterson. It is unclear why the company switched banks. A KGen official declined comment. Calls to officials at MatlinPatterson were not returned, nor was a call to a CS banker.
The financing consists of a seven-year, $200 million first-lien term loan; a seven-year, $120 million first-lien synthetic letters of credit facility and a five-year, $80 million working capital facility. The bank meeting was held last Wednesday at the midtown W hotel, where pricing was being talked at LIBOR plus 2%, but will be firmed when ratings are assigned. A Morgan Stanley banker declined comment.
KGen had also recently been involved in a private placement that was completed two weeks ago via placement agent Friedman Billings Ramsey. The equity is currently being held in escrow, but has been fully raised.
CS came to market in February 2005 to refinance a $325 million "B" loan put in place in 2004, as well as increase bank debt by $150 million (LMW, 2/28/2005). It reworked the deal that March increasing pricing on the second lien, while also cutting its size to $175 million. The first lien was offered at LIBOR plus 3% and the second lien was priced at LIBOR plus 6% (3/7/2005).