August 8, 2012 / 4:20 PM / 5 years ago

RLPC: Genesee preps RailAmerica pro-rata deal

NEW YORK, Aug 8 (Reuters) - Genesee & Wyoming Inc is expected to tap the market August 13 with a $1.3 billion pro-rata deal, sources said. The facility is part of a $2.3 billion deal backing its acquisition of RailAmerica Inc.

The pro-rata portion will launch at 2 p.m. at the W Hotel Lexington Avenue in New York City. Bank of America Merrill Lynch is leading the $2.3 billion financing package.

The pro-rata facility comprises a $425 million senior secured revolver and an $875 million, five-year term loan A due 2017. A $1 billion, seven-year term loan B due 2019 rounds out the deal.

The spread on the pro rata tranche is 250bp over Libor subject to a leverage based pricing grid. Pricing on the TLB is forthcoming.

The facility will back the acquisition of RailAmerica and refinance existing debt at Genesee. Expected corporate ratings are Ba3/BB- and senior secured Ba3/BB-.

The TLA will amortize at 5 percent in year one and two, 10 percent in year three and 15 percent in year four and five. The TLB will amortize at 1 percent per annum. The TLA will be redeemable at any time at par, while the TLB will include a 101 soft call in year one.

Covenants include a maximum net total leverage ratio and a minimum interest coverage ratio.

Genesee & Wyoming Inc said on July 23 it had struck a deal to buy rival RailAmerica Inc for $27.5 a share in cash or $1.39 billion to create the biggest short-line railroad operator in the United States.

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