Energy Co. Seeks Longer Term Financing In Tough Credit Mart
Public Service Enterprise Group (PSEG) has secured an upsized, $350 million multi-year credit facility in anticipation of reducing its shorter-term borrowings, said Morton Plawner, treasurer of PSEG. The shorter-term borrowings include $695 million of commercial paper backstop facilities coming due in March. "We don't want all of our facilities to be 364-days," noted Plawner. He explained the company wants to relieve the pressure of refinancing each year and the new credit comes with the support of the rating agencies.
The new $350 million, three-year revolver replaces a $150 million, five-year revolver that was set to expire in December 2002. Plawner noted the importance of receiving a multi-year facility during a tough credit environment for energy companies. The pricing on the new deal is LIBOR plus 11/ 4% if the facility is fully drawn. The five-year credit was priced about 1% less. Plawner attributed the increase to the rising cost of credit since the company secured the five-year deal in 1997. Borrowings under the short-term facilities carry a fee of 15 basis points.
As lead lender on all PSEG's syndicated deals over the last couple of years, J.P. Morgan led the upsized credit once again. In total, the company has about $2.5 billion of capacity with only about $600 million outstanding. While the capacity offers the company liquidity, Plawner said the amount is more than the company needs.