Massey Energy Company held a bank meeting last Wednesday in New York to launch syndication of a $450 million credit facility that will refinance existing debt. Citigroup, UBS Warburg and PNC Bank are the lead arrangers for the Richmond, Va.-based coal company, according to bankers familiar with the situation. Massey extended one of its existing revolvers last November for a year, as difficult market conditions prevented the company from completing a refinancing earlier, said Katharine Kenny, director of investor relations. The credit lines, led by PNC and Citi, were set to expire this November and so Massey did not want to wait any longer, she added.
The proposed Ba1/BB+ credit, consists of a $175 million revolver that matures in 2007 and a $275 million "B" term loan that matures in 2008, a banker stated. Pricing on the revolver is expected to be in the LIBOR plus 21/2% range and on the "B" LIBOR plus 3%. Even though market conditions delayed a refinancing last year, operational improvements in the third quarter alleviated the company's immediate need for the loan refinancing. The coal producer's improved cost structure in the third quarter yielded $140.5 million of total liquidity, about $68 million more than in the second quarter. Massey's existing bank lines are split between the extended $150 million, 364-day revolver and a $250 million line expiring this November.