Tesoro Petroleum's new bank deal was trading in the 100 3/8 101 context after the credit broke into the secondary market last week. With a non-call provision in the first year and 103 call protection for the second, one trader thought that the bank debt would be trading at more of a premium. A dealer commented that Tesoro "is not out of the woods yet." He said although the new deal has a decent interest rate and call protection, the old deal traded in the mid 90s before the refinancing got underway.
The new bank deal comprises a $200 million term loan and a $650 million revolver. In addition, the company is also pursuing $375 million in 8% senior secured notes. Sharon Layman, Tesoro v.p. and treasurer, said the new financing is slated to take out the company's existing credit facility. That credit was syndicated about a year ago and by the end of 2002, Tesoro had a $225 million revolver, a $194 million "A" loan and a $724 million "B" piece. The new term loan is priced at LIBOR plus 51/2%, up from 41/2% on the previous institutional tranche.