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Goldman, BofA Merrill Lynch Arrange Atlantic Power Senior Credit Facilities

January 31, 2014, 07:49 AM
Filed Under: Energy

Atlantic Power Corporation (the "Company"), today announced that, as part of the Company's ongoing plans to address its upcoming debt maturities and improve its financial flexibility, Atlantic Power Limited Partnership ("APLP"), a wholly-owned indirect subsidiary of the Company, launched the syndication of new senior secured credit facilities, comprising up to $600 million in aggregate principal amount of senior secured term loan facilities and up to $200 million in aggregate principal amount of senior secured revolving credit facilities (collectively, the "new credit facilities"). The Company and its subsidiaries expect to use the new credit facilities to:

  • replace the Company's existing US$150M senior secured revolving credit facility;
  • fund the optional prepayment or redemption of certain outstanding debt securities issued by subsidiaries of the Company referred to below;
  • provide for ongoing working capital needs of APLP and its subsidiaries;
  • support APLP's and its subsidiaries' collateral support obligations to contract counterparties;
  • provide for general corporate purposes of APLP and its subsidiaries;
  • (subject to certain limitations) provide for ongoing working capital needs, general corporate purposes, and collateral support obligations to contract counterparties of Atlantic Power Generation, Inc. ("APGI"), another wholly-owned subsidiary of the Company;
  • fund a debt service reserve, and pay transaction costs and expenses; and
  • (upon closing) make a distribution to the Company from remaining proceeds of the term loans, which the Company may use for any corporate purpose, including, in the discretion of the Company, additional debt reduction which may, taking into account available funds, market conditions and other relevant factors, include steps to repurchase or redeem, by means of a tender offer or otherwise, a portion of the Company's 9.0% senior unsecured notes due 2018 (the "9.0% Notes").

The Company's existing senior secured credit facilities (the "existing revolving credit facilities") contain certain guaranties, which will be terminated in connection with the termination of the existing revolving credit facilities. In addition, the terms of the Company's 9.0% Notes provide that the guarantors of such existing revolving credit facilities guarantee the 9.0% Notes. As a result, upon termination of the existing revolving credit facilities and the related guaranties, the guaranties under the 9.0% Notes will be cancelled and the guarantors of the 9.0% Notes will be released from all of their obligations under such guaranties.

The new credit facilities will be secured by a pledge of the equity interests in APLP and its subsidiary guarantors, guaranties from the APLP subsidiary guarantors, a pledge of certain material contracts and certain mortgages over material real estate rights, an assignment of all revenues, funds and accounts of APLP and its subsidiary guarantors, and certain other assets. The new credit facilities will not be otherwise guaranteed or secured by the Company or any of its subsidiaries (other than the APLP subsidiary guarantors).

APLP's existing $210 million aggregate principal amount of 5.95% Medium Term Notes due June 23, 2036 (the "MTNs") prohibit APLP (subject to certain exceptions) from granting liens over any of its assets (and those of its material subsidiaries) to secure any indebtedness, unless the MTNs are secured equally and ratably with such other indebtedness. Accordingly, in connection with the execution of the new credit facilities, APLP will grant an equal and ratable security interest in the collateral package securing the new credit facilities in favor of the trustee for the benefit of the holders of the MTNs.

The closing of the new credit facilities is subject to syndication, the conclusion of negotiations, execution of final documentation, receipt of requisite approvals and satisfaction of customary closing conditions. There can be no assurance that APLP will be successful in its syndication efforts or that APLP will be able to enter into the new credit facilities.

The Company has appointed Goldman Sachs Lending Partners LLC and Bank of America Merrill Lynch as joint lead arrangers for the new credit facilities.

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