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Alpha Natural Resources Said to Increase Loan to $625 Million

Alpha Natural Resources Inc., the second-biggest U.S. coal producer, increased a loan it’s seeking to refinance debt to $625 million from $500 million, according to a person with knowledge of the transaction.

The seven-year term portion B will pay interest at 2.75 percentage points more than the London interbank offered rate, the low end of the originally proposed range for the margin, said the person, who asked not to be identified because terms of the deal are private. Libor will a 0.75 percent minimum, compared with the 1 percent floor initially offered.

Alpha Natural Resources originally proposed paying 2.75 percentage points to 3 percentage points more than the lending benchmark. The debt will be sold at a discount of 99.5 cents on the dollar, unchanged from the initial proposal, the person said.

Proceeds of the covenant-light financing will be used to refinance a term loan A and repurchase convertible notes due in 2015. Additional funds will be used to repay a term loan A due in 2016, according to the person.

Lenders must let Citigroup Inc., the bank arranging the debt, know by 12 p.m. in New York whether they will participate in the deal, the person said.

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