Dynegy came to market looking for a $150 million add-on term loan last week. JPMorgan and Lehman Brothers lead the tranche, which is priced at LIBOR plus 1 3/4%. The company is currently going through a stock buyback and plans to use the term loan as an interim source of liquidity. The company is going to redeem all of its outstanding Series C convertible preferred stock at par for $400 million in cash from Chevron U.S.A., a subsidiary of Chevron Corp.
Moody's Investors Service assigned a Ba3 rating to the term loan and affirmed the ratings on $3.6 billion of outstanding debt, including a $470 million revolver and $200 million of synthetic letter of credits, which is currently undrawn. The new term loan will be pari passu with the existing credit facility, the ratings agency said. The facilities are secured by a first priority lien on all of Dynegy's assets, including stock in its subsidiaries. A Dynegy spokesman referred all questions to a company release issued last week.