Dynegy Inc., the independent U.S. power producer that exited from bankruptcy protection last year, cut the rate on $1.8 billion in loans it’s seeking to refinance debt, according to a person with knowledge of the matter.
A $500 million B-1 piece will pay interest at 3 percentage points more than the London interbank offered rate, down from 3.5 percentage points initially proposed, with a 1 percent minimum on the lending benchmark, said the person who asked not to be identified because the deal is private.
An $800 million B-2 portion will pay interest at 3 percentage points more than Libor with a 1 percent minimum, compared with 3.75 percentage points and with a 1.25 percent floor initially offered, the person said.
Both portions, which are covenant-light, meaning they don’t contain financial maintenance requirements, will come due in seven years, compared with two years on the B-1 slice initially proposed, and will be sold to investors at 99.5 cents on the dollar, the person said.
Lenders must let Credit Suisse Group AG, the bank arranging the financing, know by 5 p.m. today in New York if they will participate in the deal.
Katy Sullivan, a spokeswoman for Dynegy, said it was premature to comment on terms as the company is still in the market with the transaction.
The company had about $1.4 billion of long-term debt as of Dec. 31, according to a March 14 regulatory filing. It had an $837 million term loan and a $493 million term piece at March 28, the company said in an April 1 regulatory filing. These portions are being refinanced through the current transaction.
The transaction includes a $500 million revolving line of credit that comes due in five years.
In a revolving line of credit, money can be borrowed again once it’s repaid; in a term loan it can’t.