Primary Energy, an Oak Brook, Ill.-based investment boutique, has pulled a planned $375 million "B" loan refinancing, according to Power, Finance & Risk, an LMW sister publication. The move was taken after Primary failed to land the pricing and structure it wanted, sources said. The move marks the first "B" loan financing in the power sector to fail since the institutional loan market came to the fore last year.
"There was never a meeting of the minds between Primary and the market," said one observer. He added that the market word is that Bill Rockford, president and chief operating officer of Primary and a Chase Manhattan alumna, wasn't happy with overall parameters of the deal. Calls to Rockford were not returned by press time.
Lead Credit Suisse First Boston is telling investors the deal has been shelved, but it may re-appear in another form at some point. Officials at CSFB declined comment. The seven-year deal would have refinanced some 444 MW of inside-the-fence cogeneration assets tied to steel mills in Northern Indiana.
In its original guise, the financing would have allowed the sponsor to pocket $100 million in up-streamed equity. It was also split between a $175 million, amortizing first-lien term loan priced around the LIBOR plus 6% level and a $200 million, bullet-maturity second-lien term loan priced at LIBOR plus 9%, with a 2% LIBOR floor. One banker said the loan morphed into a $325 million deal, split between $200 million in first-lien and $125 million in second lien tranches. There were also additional cash sweeps structured in to the deal.
There has been a string of ultimately successful "B" loan deals for generation players, one banker said. But, he added the fluid nature of the market means many have been tweaked from the terms originally floated. In this instance, Primary is refinancing debt so it may have a little more leverage than a shop looking to wrap an acquisition.