Atlantic Power Corporation (NYSE: AT) (TSX: ATP) announced effective today a repricing of the $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 LLC. The interest rate margin on the term loan and revolver was reduced by 50 basis points to LIBOR plus 300 basis points. The LIBOR floor remains at 1.00%. This repricing is the third for these facilities; since the original financing in April 2016, the spread has been reduced a total of 200 basis points, from LIBOR plus 500 basis points to LIBOR plus 300.
The Company 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. The combined savings of the three repricing transactions is expected to be approximately $41.1 million over the terms of the facilities.
The Company expects to record fees related to this transaction in the second quarter of 2018 similar to those recorded on the most 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 Chief Financial Officer 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."
About Atlantic Power
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 predominantly under long?term PPAs that have expiration dates ranging from 2018 to 2037. The Company seeks to minimize its exposure to commodity prices through provisions in the contracts, fuel supply agreements and hedging arrangements. The projects are diversified by geography, fuel type, technology, dispatch profile and offtaker (customer). The majority of the projects in operation are 100% owned and directly operated and maintained by the Company. The Company has expertise in operating most fuel types, including gas, hydro, and biomass, and it owns a 40% interest in one coal project.
