MEG Energy Said to Extend and Lower Rate on $987.5 Million LoanMichael Amato
MEG Energy Corp., the Canadian oil-sands developer, is seeking to lower the rate it will pay on a $987.5 million covenant-lite term loan and extend the maturity by two years, according to a person with knowledge of the transaction.
The interest on the debt, which will now mature in March 2020, will be reduced to 2.25 percentage points more than the London interbank offered rate and will be sold at par, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.
Lenders are being offered six months of soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first six months.
Barclays Plc is arranging the transaction and commitments are due Feb. 13 by noon in New York, according to the person.
Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 1.9 times total, the person said.
The company’s existing term loan, which matures in March 2018, pays interest at 3 percentage points more than Libor, with a 1 percent floor, according to data compiled by Bloomberg. The debt was quoted at 101.375 cents today, according to prices compiled by Bloomberg.