Cleco Corp. lenders have stepped up commitments in the energy company's amended credit facility to fill the lending gap after the departure of two Japanese banks from its syndicate. Mike Sawrie, manager of corporate finance, said the company did not have to add additional banks to make up for the exit of the former lenders, Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank.
Sawrie said he did not know why the two banks dropped out, but added that they did not have any other business with the company. Officials at the Japanese banks did not return calls seeking comment. Fourteen banks now participate in Cleco's amended credit facility, which increases the revolver of its subsidiary Cleco Power to $275 million from $150 million and extended its maturity by one year to 2011. Pricing was reduced to LIBOR plus 32 basis points from LIBOR plus 47 1/2 basis points. Four-and-a-half points were also knocked off the facility fee, which now sits at eight basis points.
Cleco also obtained cheaper financing on its $150 million corporate credit facility. Pricing on Cleco Corp.'s revolver was cut 15 basis points to LIBOR plus 52.5 basis points and the facility fee was reduced seven-and-a-half basis points to 12.5.
The company sought to increase its Cleco Power revolver to provide more liquidity for the construction of its $1 billion Rodemacher Unit 3 generation project, as well as for general corporate purposes. Sawrie added the improved market conditions and the ability to get better pricing also prompted it to seek an amendment. BNY Capital Markets is co-lead arranger and bookrunner on both facilities. WestLB is the other co-lead on the Cleco Power revolver, while JPMorgan co-leads the Cleco Corp. revolver.
Sawrie said a few of its banks suggested increasing the Cleco Power facility to increase liquidity for the construction project. He noted the company had been thinking along the same lines so it took the banks' cue. BNY Capital Markets has been a lead bank for the company for at least a decade and the company is happy with its performance, said Sawrie. "We like to have a level of comfort with our banks so that we know their recommendations are sound," he said.