Credit Suisse First Boston set pricing on KGen Partners $475 million bank deal after a bank meeting Feb. 15. The Matlin-Patterson-sponsored company 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. The refinancing will also have significantly cheaper rates.
The $475 million loan is split into a $225 million "B" loan that is rated B+/B2 and a $250 million second-lien piece rated B-/B3. Both have tenors of six-and-a-half years. The first-lien debt is being offered at LIBOR plus 3% and the second-lien piece is being sold at LIBOR plus 6%. Originally the 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 declined comment and officials at Matlin did not return calls.