Keane Group entered into a new senior secured term loan facility in an initial aggregate principal amount of $350 million to refinance its existing term loan credit facility – of which approximately $282.5 million in aggregate principal amount was then outstanding – and to pay related fees and expenses as well as accrued interest of $4.3 million.
After discounts and fees related to the new term loan facility, approximately $50 million of excess proceeds remained to fund general corporate purposes.
The new term loan facility has, at the company’s election, an interest rate per annum initially equal to either the base rate plus 2.75% or LIBOR (subject to a 1.00% floor) plus 3.75%, compared to the existing term loan credit facility’s interest rate per annum of either the base rate plus 6.25% or LIBOR (subject to a 1.00% floor) plus 7.25%.
The facility has a stated maturity date of May 25, 2025. Assuming an interest rate for the new term loan facility at the initial interest rate specified above, the refinancing is expected to result in annualized cash interest savings of approximately $5 million driven by lower interest rates, partially offset by an increased facility size.
“The new facility provides for greater financial flexibility by extending our maturity profile, securing favorable rates and further improving our liquidity. The new facility, combined with an already attractive financial position and strong cash flow generation, increases our capacity to grow our business and return value to shareholders,” said Greg Powell, Keane president and CFO.
Barclays, J.P. Morgan and Bank of America Merrill Lynch acted as joint lead arrangers and book runners on the transaction. Citigroup and Morgan Stanley acted as the senior managing agents, and The Bank of Nova Scotia and Stifel, Nicolaus acted as the co-managers. Barclays will serve as the administrative agent.
Houston-based Keane is one of the largest pure-play providers of integrated well completion services in the U.S.