Star Gas inks five-year $300 million revolver, $100 million term loan

By Wendy Van Sickle

Columbus, Ohio, July 30 – Star Gas Partners, LP entered into an amended and restated five-year $300 million asset-based revolving credit facility and a $100 million term loan on Thursday, according to an 8-K filed with the Securities and Exchange Commission.

The revolver’s capacity rises to $450 million annually during the December through April heating season.

Interest for the revolver ranges from Libor plus 150 basis points to 200 bps. The term loan interest ranges from Libor plus 200 bps to 250 bps.

The commitment fee for the unused portion of the revolver is 30 bps from December through April and 20 bps the rest of the year.

The partnership can increase the revolver by $100 million, but the bank group is not obligated to fund the increase. In that case, the partnership can add additional lenders to the group with the consent of the agent, JPMorgan Chase Bank, NA.

J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc. and Citizens Bank, NA are the joint lead arrangers and bookrunners. Bank of America, NA and Citizens Bank, NA are the syndication agents and KeyBank NA, Regions Bank and TD Bank, NA are the co-documentation agents.

The partnership must meet certain financial covenants, including a fixed charge coverage ratio of not less than 1.1 as long as the $100 million term loan is outstanding or revolving loan availability is less than 12.5% of the facility size.

Also, as long as the $100 million term loan is outstanding, a senior secured leverage ratio cannot be more than 3.0 during the quarters ending June or September, and no more than 4.5 during the quarters ending December or March.

The revolver will be used for working capital purposes, including up to $100 million in letters of credit.

Proceeds from the term loan will be used to redeem the partnership’s outstanding $125 million in 8 7/8% senior notes due 2017.

The facilities mature in July 2020.

Star Gas is a Stamford, Conn.-based retail distributor of home heating oil.

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