Credit Suisse First Boston has rejiggered the terms onKGen Partners $475 million bank deal. Syndication of the deal for the Matlin-Patterson-sponsored company was launched at a bank meeting Feb. 15, with CSFB pitching a $225 million "B" loan and a $250 million second-lien piece. The first-lien debt was being offered at LIBOR plus 3% and the second-lien piece at LIBOR plus 6%.
The "B" is rated B/B2 and has now been increased to $300 million. This is still priced at LIBOR plus 3%. The second-lien piece, rated B-/B3, has been reduced to $175 million, but pricing has gone up 175 basis points.
KGen is refinancing a $325 million "B" loan that was put in place a year ago and is increasing the bank debt by $150 million. The increase was necessary because original cash reserves were depleted last year in the cooler than anticipated summer, which meant thinner revenues, said Arleen Spangler, utilities energy ad project finance analyst at Standard & Poor's (LMW, 2/28). The refinancing will also have significantly cheaper rates. The previous two-tranche loan was split into a $150 million first-lien piece priced at LIBOR plus 4% and a $175 million second-lien at LIBOR plus 11 7/8%. CSFB bankers did not return calls.