Consolidated Energy (CEL) subsidiary Natgasoline priced around $900 million of new senior secured debt financing, including a $565 million term loan B facility and $336 million in bonds in the U.S. tax-exempt market to be issued by the Mission Economic Development, the proceeds of which will be loaned to the company. As part of the revised financing structure, Natgasoline has also secured a $60 million revolving credit facility that will not be drawn at closing.
J.P. Morgan served as left lead arranger and bookrunner on the term loan B, with Goldman Sachs acting as joint lead arranger and bookrunner. The tax exempt transaction was underwritten by Citigroup Global Markets and Morgan Stanley, with Citigroup serving as the bookrunner.
Proceeds will be used to refinance the existing $252 million of tax-exempt bonds issued in 2016 and existing shareholder and contingency loans, as well as funding working capital and financing costs.
The term loan B is priced at LIBOR plus 350 bps with maturity in 2025, a material saving compared to the 9% and 10% shareholder and contingency PIK notes it will replace. The coupon for the tax exempt bond was priced at 4.625%, with maturity in 2031 and a final yield of 4.72%, compared to a coupon of 5.75% for the bonds being refinanced.
The completion of the refinancing will result in significant interest savings and a move to a long-term capital structure that is reflective of the expected strong cash generation and profitability profile of Natgasoline. It also provides a financing structure that allows for more flexibility in Natgasoline’s distributions to the joint venture sponsors.
David Cassidy, chairman of CEL and Natgasoline said, “Having made our initial investment in Natgasoline in early 2016, we are very pleased to have completed construction of the plant, delivered ramp-up to nameplate production, and established stable methanol production and sales in recent months. The Natgasoline team has done an outstanding job in delivering the successful start-up of what is now the United States’ largest methanol production facility.”
The closing of the term loan B facility and the tax exempt bonds is expected to occur on November 14, 2018 and is subject to customary closing conditions.
The tax exempt bond and term loan B have received a preliminary project finance rating of BB- by Standard & Poor’s and the Term Loan B is rated Ba3 by Moody’s.
