Dynegy Inc. will launch a $1.3 billion credit facility on Monday to replace the company’s current $1.1 billion revolving credit facility, which is scheduled to mature in February 2005. The refinancing has been considered integral to the company’s credit rating.

The new facility is expected to have a term loan component as well as a revolving credit component. The lead arrangers have committed $625 million in aggregate toward the revolving credit portion of the new credit facility. The increased size of the new facility will be used to repay existing higher-cost indebtedness and for general corporate purposes.

“This new credit facility will be another significant milestone in the progress we have made by working collaboratively with our bankers to advance Dynegy’s self-restructuring through sound financial strategies,” said CEO Bruce A. Williamson.

Plans to obtain a new credit facility were announced when Dynegy released its first quarter earnings last month (see Daily GPI, April 29).

Last year, Moody’s Investors Service and Standard & Poor’s indicated they would not consider upgrading Dynegy’s junk credit rating until it had restructured some of its debt, including the $1.1 billion credit facility that would have been due Feb. 15, 2005 (see Daily GPI, Aug. 11, 2003; Aug. 7, 2003).

“Based on our track record of accomplishments, improved market conditions and the support of a core bank group that wants to be part of Dynegy’s future,” said Williamson, “we expect to secure new, long-term financing with measurable advantages over the company’s current $1.1 billion facility, including lower interest costs, greater flexibility and a longer term. Importantly, the new facility will also provide continued liquidity to support our operating businesses.”

Targeted to close in the second quarter, the lead arrangers are Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse First Boston, J.P. Morgan Securities Inc. and Lehman Brothers Inc.

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