J.P. Morgan Chase & Co. on Wednesday, Feb. 15, launched a $500 million senior secured term loan due 2019. Proceeds will be used to repay $500 million of 10.125% senior subordinated notes due 2016, according to a source and ratings agencies. A source said the $500 million loan, which has limited maintenance covenants, is expected to price between LIBOR plus 450 to 475 basis points, with a LIBOR floor of 1.25%, the source confirmed.

But the company, which has about $3 billion due in 2016, may find it difficult to repay debt from free cash flow without additional external financing. All told, after debt service payments, total debt coming due in 2016 is $6.7 billion.

"It would be a significant stretch," said Jason Pompeii, an analyst with Fitch Ratings, which rated Freescale CCC, saying the company's cash flow is "anemic."

Pompeii said he expects the company to opportunistically push out debt.

Still, the business has been recovering from the troughs during the recession. Ebitda, which excludes interest expense, stood at about $1.08 billion in 2011, up from $1 billion in 2010. Revenue grew from $3.6 billion in 2010 to $4.6 billion in 2011. (Its fiscal year ends April 1.) That compared with $3.5 billion in 2009, little less than half the $6.4 billion of revenue it reported in 2006. Adjusted Ebitda tumbled 69% in 2009 to $579 million from $1.86 billion in 2006.

With the operational improvements, Pompeii said the company can reduce total leverage from about 6 times 2012 Ebitda to 5.5 times.

New York-based Blackstone, Washington's Carlyle Group, London's Permira and TPG Capital of San Francisco and Fort Worth, Texas, injected $7.1 billion of equity when they acquired Freescale in 2006 for $17.6 billion.

Freescale is one of several highly leveraged megabuyouts to tap an increasingly active market for debt refinancings, a trend reflected in the covenant-lite terms of Freescale's new term loan. If successful, Freescale's refinancing suggests an improving appetite for bank loans. Seven out of nine deals in the bank loan market were for refinancing sponsor-backed companies.

Others, such as Caesars Entertainment Corp. and Energy Future Holdings Corp., have relied on the bond markets in recent weeks.

Since Freescale went public in May 2011, the company has pared its debt using $742 million from the IPO together with cash on hand. At the end of 2011 it had $6.59 billion of long-term debt, down from $7.58 billion the year before. Debt net of cash was $5.82 billion.

Freescale's stock closed at $17.41 Thursday. Market capitalization based on Wednesday's $17.22 per share closing stock price was $4.23 billion.

J.P. Morgan declined to comment. Representatives of Freescale and Blackstone did not immediately return calls.

-- David Carey contributed to this story.