Peabody Energy Corp. (BTU), the largest U.S. coal producer, is seeking $2.7 billion of loans to help refinance debt, according to a person with knowledge of the transaction.
A $1.2 billion, seven-year term loan will pay interest at 2.75 percentage points more than the London interbank offered rate, with a 1 percent floor on the lending benchmark, said the person, who asked not to be identified because terms aren’t set. The debt may be sold to investors at 99 cents on the dollar.
Peabody is also seeking a $1.5 billion revolving credit line that will expire in five years or 91 days before its 6 percent notes mature in 2018, whichever is earlier, the person said. Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.
The term loan, led by Citigroup Inc., is being offered to investors with 101 soft-call protection for the first six months, meaning St. Louis-based Peabody would have to pay a one-cent premium to reprice the debt during that period, according to the person.
Lenders are asked to let the bank know by Sept. 17 whether they will participate in the credit pact.
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