TXU this morning said in an SEC filing that its loan extension took effect yesterday after the company applied proceeds from its newly issued bond deal to repay roughly $1.6 billion of bank debt.
With the extension completed, the amounts outstanding under its senior secured credit facilities, which are issued by Texas Competitive Electric Holdings, are as follows, according to today’s filing:
- Roughly $15.4 billion of term loans maturing in October 2017
- Roughly $3.8 billion of term loans maturing in October 2017
- An approximately $1.02 billion deposit LC facility coming due in October 2017
- An approximately $43 million deposit LC facility maturing in October 2014
- An approximately $1.38 billion revolving credit coming due in October 2016
- An approximately $671 million revolving credit maturing in October 2013
The non-extended loan is priced at L+350, versus L+450 on the extended tranche; extending lenders were also paid a 350 bps upfront fee to extend. Drawn pricing on the extended portion steps up to L+450, from L+350, while the commitment fee is being boosted to 100 bps, from 50 bps.
Of note, the former B-1, B-2, B-3 and delayed-draw tranches now trade as a single non-extended tranche, sources said. The non-extended loan eased a touch to bracket 86 this morning, from 86/86.5 yesterday, while the extended loan is pegged at 80.125/80.625.
The extended loans include a springing maturity to bonds maturing in 2015 and 2016, according to the filing. The springing maturity would be triggered 90 days prior to the maturity of the various bond issues if there are more than certain specified amounts outstanding under the bonds and if the company’s total leverage is above 6x.
The company said it repaid roughly $1.6 billion of loans with the proceeds from the recently placed $1.75 billion issue of 11.5% senior secured notes due 2020. The company also used proceeds from the bond deal to pay fees and expenses related to the amendment. As reported, the notes priced Thursday via J.P. Morgan, Goldman Sachs, Citi, Credit Suisse and Morgan Stanley at 99.295, to yield 11.625%.
(For an analysis of how TXU’s extension helps impact the maturity wall, click here)
The company earlier this month inked an amendment that was launched alongside the extension. The amendment relaxes the secured-leverage test to 8x, from 6.75x, through the end of 2014, with step-downs thereafter, according to sources. In addition, as per the amendment, up to $1.5 billion of senior secured first-lien bonds can be excluded from the calculation of secured leverage as per the covenant, provided that the proceeds are used to repay term loans and LC facilities.
Consenting lenders were offered a 50 bps fee to approve the amendment.
The company also asked its lenders to acknowledge that intercompany loans from TCEH to Energy Future Holdings (EFH) comply with the requirement in the credit agreement that the loans be made on an “arms-length” basis, and that the company was not required to have made any excess-cash-flow payments in 2008-10. The company disclosed in today’s 8-K filing that it repaid certain intercompany notes.
As reported, hedge fund Aurelius Capital Management earlier this year alleged a default under the credit facilities due to non-compliance with intercompany loans. At the time, TXU called the allegations “without merit.” – Kerry Kantin
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