Southwestern Energy Co. (NYSE: SWN) has entered into a $750 million three-year term loan agreement and using its proceeds to pay down balances under its existing credit facility and commercial paper program.
The term loan is unsecured and includes an interest rate calculated based upon the company's credit rating (currently 137.5 basis points over the current London Interbank Offered Rate). The term loan is prepayable at any time and requires prepayment from the net cash proceeds of any issuance of debt or equity securities and sales of assets, with certain exceptions. The other provisions in the term loan are substantially the same as those contained in the existing revolving credit facility.
Analysts with Seaport Global Securities call the deal a “modest positive.”
“Post inking a three-year $750MM term loan, SWN received a nice boost to liquidity and retired the majority of its commercial paper and credit facility borrowings (~$800MM outstanding collectively as of 9/30) under similar financing terms vs. its credit facility. Pro forma for the deal, we estimate that SWN has ample liquidity at $1.97B, and no plans to outspend in FY16. In addition, SWN issued an automatic shelf registration statement to replace its previous shelf (expired 11/13), but does not anticipate specific offerings at this juncture,” the analysts noted.