NFR Energy Said to Seek $500 Million Term Loan for Acquisitions

NFR Energy LLC, a oil and natural gas producer, is seeking a $500 million covenant-lite second-lien term loan, according to a person with knowledge of the transaction.

Proceeds from the debt due in December 2018 will be used to partially finance the acquisition of TLP Energy LLC and certain assets of Blue Eagle Energy LLC, said the person, who asked not to be identified because the information is private.

Lenders are being offered call protection of 102 cents in the first year and 101 cents in the second year, according to the person. The debt is rated Caa1 by Moody’s Investors Service and B by Standard & Poor’s.

Bank of America Corp., Citigroup Inc. and Natixis are arranging the financing for the Houston-based company and will host a lender meeting tomorrow at 10:30 a.m. in New York, the person said.

Shane Bayless, chief financial officer of NFR Energy, didn’t immediately respond to an e-mail seeking comment.

First-lien debt is repaid first in a bankruptcy or liquidation, second-lien borrowings are repaid next. Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.

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