NewPage amends to lift pricing, add floor and revise covenants

By Sara Rosenberg

New York, Sept. 11 - NewPage Corp. amended its credit facility on Friday, increasing pricing, adding a 2.5% Libor floor and modifying covenants, according to an 8-K filed with the Securities and Exchange Commission.

Pricing on the company's revolver was changed to Libor plus 350 basis points from Libor plus 200 bps and no longer will vary based on total leverage, and pricing on the term loan was changed to Libor plus 700 bps if senior leverage is greater than or equal to 3.00:1.00 and Libor plus 650 bps if senior leverage is less than 3.00:1.00. The new term loan pricing represents an increase of 325 bps from the previous rate.

In addition, the unused fee on the revolver was increased to 50 bps from 37.5 bps.

As for covenants, compliance with the interest coverage ratio, total leverage ratio and senior leverage ratio requirements has been suspended until the fiscal quarter ending June 30, 2010. Compliance with the fixed-charge coverage ratio has been suspended until the fiscal quarter ending March 31, 2011.

The minimum interest coverage ratio has been amended to 1.00:1.00 beginning with the quarter ending June 30, 2010, stepping up over time to 2.00:1.00 for the quarter ending March 31, 2013 and subsequent quarters, whereas previously it ranged from 2.00:1.00 to 2.50:1.00 during the same period.

The maximum total leverage ratio has been amended to 9.75:1.00 beginning with the quarter ending June 30, 2010, stepping down over time to 4.75:1.00 for the quarter ending June 30, 2013 and subsequent quarters, where previously it ranged from 5.00:1.00 to 3.75:1.00 in the term loan and 5.00:1.00 to 4.00:1.00 in the revolver during the same period.

The maximum senior leverage ratio has been amended to 5.25:1.00 beginning with the quarter ending June 30, 2010, stepping down over time to 2.50:1.00 for the quarter ending Sept. 30, 2012 and subsequent quarters, whereas previously it ranged from 2.50:1.00 to 1.25:1.00 in the term loan and 2.50:1.00 to 1.50:1.00 in the revolver during the same period.

And, the minimum fixed-charge coverage ratio covenant has been amended to 1.00:1.00 beginning with the quarter ending March 31, 2011, stepping up over time to 1.20:1.00 for the quarter ending June 30, 2013 and subsequent quarters, whereas previously it ranged from 1.10:1.00 during the same period.

Prior to the amendment, compliance with the interest coverage ratio, fixed-charge coverage ratio, total leverage ratio and senior leverage ratio under the revolver did not apply for any fiscal quarter unless excess availability was less than $50 million for 10 consecutive business days during such fiscal quarter or was less than $25 million for three consecutive business days during such fiscal quarter.

Furthermore, the limitations on capital expenditures have been revised to include a limit of $125 million for each four fiscal quarter period through the fiscal quarter ending March 31, 2010, and an annual limit of $250 million for fiscal year 2010 and each fiscal year thereafter. From and after the second fiscal quarter in 2010, if the total leverage ratio at the end of the fiscal quarter is 3.50:1.00 or less, the company may make or incur capital expenditures in excess of the $250 million annual limitation.

Under the term loan amendment, the company must maintain a minimum consolidated liquidity of at least $150 million.

Under the revolver amendment, the company may not permit excess availability to be less than $50 million.

The amendment also allows the company to request in the future an extension of the final maturity date of the revolver, and to repurchase term loans at a discount through a Dutch auction if senior leverage is less than 3.00:1.00 and excess availability under the revolver following the buyback is at least $75 million.

Other terms revised through the amendment include the percentage of excess cash flow that must be used to prepay the term loan, the restricted payments covenant to permit repurchases of the company's floating-rate senior secured notes due 2012 and 10% senior secured notes due 2012 with the amount allowed to be repurchased subject to the senior leverage ratio, and the restricted payments covenant to allow for the repayment of floating-rate senior unsecured PIK notes due 2013 and 2015 with the proceeds of an initial public offering.

Also, the covenants in the term loan restricting liens have been revised to impose certain caps on the refinancing of existing debt with new secured debt and the refinancing baskets have been clarified to allow the payment of original issuance discount and capitalized interest on refinancing debt, the foreign debt basket was reduced by half to $50 million and the general debt basket for debt secured by all the property and assets of the credit parties other than the collateral that secures the revolver was eliminated.

Goldman Sachs is the administrative agent on the deal.

Lenders were paid a 50 bps amendment fee.

NewPage is a Miamisburg, Ohio-based coated paper manufacturer.

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