Atlantic Power repriced its $510 million senior secured term loan and $200 million senior secured revolving credit facility at its APLP Holdings Limited Partnership subsidiary, via a group of arranging banks led by Goldman Sachs Lending Partners.
The interest rate margins on the term loan and revolver were reduced by 50 basis points to LIBOR plus 300 basis points, with the LIBOR floor remaining at 1.00%.
Atlantic Power is permitted to prepay the term loan in the first six months following this transaction at a 1% premium. Following the six-month period, prepayment is permitted at par. The mandatory 1% annual amortization and cash sweep provisions of the term loan are unchanged.
As a result of this repricing, the company expects to realize interest cost savings in 2018 of approximately $2.1 million, before transaction-related costs. Cumulative savings through the maturity dates of the term loan (April 2023) and revolver (April 2022) are estimated to be approximately $8.5 million.
Atlantic Power expects to record fees related to this transaction in the second quarter of 2018 similar to those recorded on the previous repricing transaction in October 2017.
“We are pleased to have achieved another reduction in the cost of our term loan and revolver, which will benefit our cash flow through the maturity dates of both facilities,” said Terrence Ronan, executive vice president and CFO of Atlantic Power. “The tighter spread was the result of continued strong credit market conditions and our progress to date in reducing our leverage. We expect to repay another $100 million of debt in 2018.”
Atlantic Power is an independent power producer that owns power generation assets in nine states in the United States and two provinces in Canada. The generation projects sell electricity and steam to investment-grade utilities and other creditworthy large customers.