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Dynegy Secures Financing Package for $1.66B
Dynegy Inc.’s CEO said Wednesday that the company had reached a “defining point” in its rebuilding process, after securing a new $1.66 billion bank credit financing package that won’t come due until 2005. The new facility replaces existing loans held by subsidiary Dynegy Holding (DHI), which would have matured over the next two months.
The package includes a $1.1 billion secured revolving credit facility that matures on Feb. 15, 2005; a $200 million secured term loan that also matures on Feb. 15, 2005; and a $360 million secured term loan that matures on Dec. 15, 2005.
This new credit facility replaces an existing $900 million loan due April 28, as well as a $400 million revolving credit that was scheduled to mature on May 27. DHI also secured a $360 million communications lease, which was scheduled to mature in December 2005. The new facility, which requires no scheduled amortization of principal, will provide funding for the ongoing collateral needs of existing businesses and general corporate purposes. The facility also preserves the commitments of the 21 lenders in the former DHI revolvers and communications lease financings.
“Today’s announcement is more than a significant milestone that solidifies our ability to serve and deliver value to our stakeholders for the long-term,” said CEO Bruce A. Williamson. “These bank facilities represent the defining point where we transition from building a new Dynegy to operating as the new Dynegy.”
Williamson said the company was “extremely pleased that, with the full support of our bank team, we were able to complete our refinancing arrangements on acceptable terms well in advance of the maturity dates.” He added that the new facilities will “preserve our substantial liquidity” and “allow us to continue to restore confidence with our employees, customers and suppliers.”
The restructured debt is secured by a substantial portion of the available assets and stock of the company’s direct and indirect subsidiaries, but not including Illinois Power and an asset scheduled to be sold, Dynegy Global Communications. Credit Suisse First Boston, Morgan Stanley and Greenhill & Co. acted as financial advisers to the company. Co-lead arrangers for the lenders were Salomon Smith Barney Inc., Banc of America Securities LLC and Bank One, NA.
Because of higher than expected interest costs associated with the new facility and an increase in collateral requirements for existing businesses, Dynegy revised its 2003 interest costs to now range between $450 million to $465 million, up from a previous guidance of $417 million. However, the company said it would not revise its previous earnings and cash flow because it expects earnings to offset the incremental costs.
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