Warburg Pincus turned to a trio of banks to back its Targa Resources' $2.35 billion purchase of Dynegy's Midstream natural gas producing business. Syndication of the deal launched last Wednesday. Credit Suisse First Boston and Merrill Lynch are the joint leads with Goldman Sachs signed onto the deal as a joint bookrunner. The loans consist of a six-year, $250 million revolver; $300 million synthetic letters of credit, with a six-year maturity, and a two year, $700 million asset-sale term loan. These three tranches are priced at LIBOR plus 2 1/4%. A seven-year, $1.15 billion term loan "B" is priced at LIBOR plus 2 1/2%. A spokesman for Dynegy said the decision to sell that division offers the company the opportunity to focus on its power generation business and delever.
Based in Houston, Targa is an independent midstream energy company formed in 2003 by Warburg Pincus. A spokeswoman for Warburg Pincus did not return a call. Representatives from Targa could not be reached.