W&T Offshore's first institutional term loan debuted in the secondary market last week, breaking at 100 1/2. A dealer said trading volume was moderate on the $300 million term loan and that it probably would have broken around 101 two months ago when deals were breaking higher. He added that he was not surprised the loan broke where it did because it was priced at the tight end of its original price talk. Toronto Dominion and Lehman Brothers lead the deal, which also includes a $500 million term loan "A" and a $500 million revolver. The financing backs W&T's merger with Kerr McGee's Gulf of Mexico oil and gas reserves.
The four-year term loan "B" is priced at LIBOR plus 2 1/4%, while the term loan "A," which is structured as an 18-month bridge loan, is priced at LIBOR plus 2 3/4%. Original price talk on the term loan "B" was LIBOR plus 2 1/4%-2 1/2%, but a trader said the deal was four times oversubscribed. He added that the credit line contains a large pro-rata tranche because the issuer is used to dealing with a large staple of banks and had requested that the term loan "B" be syndicated to only a small group of institutional investors.
Moody's Investors Service assigned a B2 rating to the senior secured credit facility. A call to Manuel Mondragon, assistant treasurer, was not returned.