Power company Sierra Pacific Resources has obtained cheaper financing and increased the size of its revolving credit facilities on the back of improved credit ratings. The company has completed a $750 million credit comprising a five-year, $500 million revolver for its subsidiary, Nevada Power, and a five-year, $250 million revolver for its unit, Sierra Pacific Power. Both facilities, which mature in 2010, are priced at LIBOR plus 87.3 basis points. They replace a $350 million revolver and a $50 million revolver, both priced at LIBOR plus 2%.
In September, Moody's Investors Service upgraded the power company's corporate family ratings to Ba3 from B1 and its utility subsidiaries to Ba1 from Ba2. In August, Standard & Poor's revised the outlook on Sierra Pacific Power and its utilities to positive from negative and affirmed its B+ corporate credit rating.
Bill Rogers, corporate treasurer, said the new credit facilities have also helped it deepen and broaden its banking relationships. Wachovia Securities, Union Bank of California and Citigroup were joint book managers for the Nevada Power credit facility. Wachovia and Deutsche Bank were joint book arrangers for the Sierra Pacific Power credit facility. The Union Bank of California was the sole lead on the company's previous credit facilities. New banks in the syndicate include UBS, Barclays Capital and Société Générale. "We selected the banks based on the terms they were offering and their credit commitments," said Rogers. "We thought we got a very fair deal." Rogers approached eight banks to lead the deal. He said he prefers banks that have a large market presence, offer competitive credit terms and are able to make large credit commitments.
The facilities will be used for general corporate purposes. Nevada Power's credit facility may be used for the bridge financing of a 75% ownership interest in the Silverhawk Power Station in Nevada. The acquisition is pending regulatory approval. The new credit facilities include sublimits for the issuance of standby letters of credit of $375 million for Nevada Power and $197.5 million for Sierra Pacific Power.