Consistent with our efforts to optimize and simplify our capital structure, during 2012, we entered into an $835 million first lien term loan, the proceeds of which were used to redeem 10% (or approximately $590 million) of our senior secured notes and to retire variable rate project-level BRSP debt (approximately $218 million remaining balance). The term loan, which amortizes at a rate of 1% per year, matures in 2019. The term loan currently bears interest at LIBOR plus 3.25% per annum (subject to a LIBOR floor of 1.25%). This transaction is expected to produce annual interest savings of approximately $25 million.
Subsequently, in February 2013, we repriced approximately $2.5 billion of our first lien term loans, including the aforementioned $835 million term loan. This repricing lowers the term loans’ LIBOR floor by 0.25% to 1.0% and lowers their applicable margin by 0.25% to 3.0%. We estimate that this repricing will produce additional annual interest savings of approximately $12 million. We expect this transaction to close in the second half of February.
Adjusted Free Cash Flow was $564 million in 2012, compared to $489 million in 2011. Adjusted Free Cash Flow increased during the period primarily due to lower interest expense associated with our refinancing efforts, as well as a $23 million increase in Adjusted EBITDA, as previously discussed. Lower major maintenance expenditures related to our plant outage schedule further contributed to the improvement in Adjusted Free Cash Flow.
CAPITAL ALLOCATIONPortfolio Optimization During the fourth quarter of 2012, we completed the following transactions that allowed us to strategically redeploy capital:
- the purchase of our Bosque Energy Center, an 800 MW modern, natural gas-fired combined-cycle power plant in Central Texas, for approximately $432 million, or $540/kW
- the sale of our Broad River Energy Center, an 847 MW natural gas-fired peaking power plant in South Carolina, for approximately $427 million 5, or $504/kW and
- the sale of our Riverside Energy Center, a 603 MW combined-cycle power plant in Wisconsin, for approximately $402 million, or $667/kW.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV