Credit Suisse and Goldman Sachs last Wednesday launched syndication of $1.645 billion of loans to back Tenaska's acquisition of generation assets from Constellation Energy. The deal consists of a five-year, $50 million revolver; a seven-year, $250 million special letter of credit facility; a seven-year, $850 million term loan "B" and an eight-year, $495 million second-lien term loan. The revolver and term loan "B" are priced at LIBOR plus 2 1/2%, the letter of credit is priced at LIBOR plus 1 3/4% and the second lien is priced at LIBOR plus 5 1/2%. Lehman Brothers, JPMorgan and Calyon are also involved in the credit.
"It's a lot like other CS deals, and other deals in this space," said one investor. "It's got a first lien, second lien, fairly high leverage. Tenaska is a good [company] the only question I have is whether it is suitable leverage for the deal." One portfolio manager named it as his favorite deal of the week. "It's a name I've known for a long, long time I've dealt with them for 20 years," he said. "They have real good managers."
Tenaska announced Oct.11 it would acquire 3,145 megawatts of natural gas-fired generation assets from Constellation Energy for approximately $1.635 billion. The acquisition includes six generating facilities including ones in California, Texas, Virginia, West Virginia and two in Illinois. Tenaska is a power development company and energy marketer headquartered in Omaha. Jerry Crouse, cfo, referred calls to Daniel Lonergan, managing director of Tenaska Power Fund, who did not return a call.