Atlantic Power launched the next step in its plan to reshape its balance sheet and further reduce its near-term debt maturities. The company intends to refinance the existing term loan and revolving credit facility at its Atlantic Power Limited Partnership (APLP) subsidiary. The new term loan, to be raised by APLP Holdings Limited Partnership (APLP Holdings), an intermediate holding company for APLP and a wholly-owned subsidiary of the company, is expected to be increased in size to up to $700 million, with excess proceeds expected to be utilized for the redemption of the company’s convertible debentures maturing in 2017 as well as other potential initiatives to reshape the company’s capital structure.

The new term loan is expected to have a seven-year maturity (two years later than the maturity of APLP’s existing term loan) and the new revolver a five-year maturity (three years later than the maturity of APLP’s existing revolver). Following completion of the refinancing, the company will have no corporate debt maturities prior to 2019. Although initially this refinancing will not result in a net reduction in debt, debt reduction is expected to occur over time through mandatory amortization of the new term loan and a 50% cash sweep.

The company has appointed Goldman Sachs Lending Partners and Merrill Lynch as joint bookrunners for the new credit facilities.

The company and its subsidiaries expect to use the New Credit Facilities to:

  • Replace APLP’s existing $210 million senior secured revolving credit facility maturing in February 2018
  • Fund the prepayment of the APLP senior secured term loan, which had an outstanding principal amount of $473.2 million as of December 31, 2015 and which matures in February 2021

  • Fund a debt service reserve for the new revolving credit facility

  • Pay transaction costs and expenses
  • Upon closing, make a distribution to the company from remaining proceeds of the term loan, which the company may use for any corporate purpose

    • Dedham, MA-based Atlantic Power owns and operates a diverse fleet of power generation assets in the U.S. and Canada.