CenterPoint Energy is looking for an extension on its $3.85 billion loan facility, maturing this fall, and also wants to delay and reduce two $600 million payments due this year that are required under the current deal, according to sister publication Power, Finance & Risk. With the first $600 million due at the end of this week, the Houston player will likely be right up against deadline, say lenders poring over the paperwork. "It'll be tough to make the deadline," said one banker. Leticia Lowe, a spokeswoman for CenterPoint, said the company is not commenting on the talks with banks.
The deal on the table, which would extend the facility from an October maturity out to June 2005, is priced at LIBOR plus 41/2% and will be partly secured, noted one financier. In addition the pay down of the debt would change to a $400 million slug three months after the new deal closes and a further $400 million by year-end, he added. Lead J.P. Morgan is pressing lenders to agree to the deal because if the agreement is not in place by next Friday, the company will default on the first $600 million payment, bankers said. Calls to J.P. Morgan spokesman Mike Dorfsman were not returned.
Aside from the tight deadline, bankers think the deal is a solid one and are not expecting the last minute drama seen when the original facility was set up last year as stragglers quibbled over the terms (LMW, 11/3). "It's a fair deal," said one lender. CenterPoint is essentially looking to buy time so that it can complete the process of retrieving funds from stranded assets in Texas.