Merrill Lynch and Credit Suisse First Boston will be leading the debt financing backing Northwest Natural Gas' acquisition of Enron's Portland General Electric utility. CSFB advised the seller, Enron, and Merrill advised the buyer, Northwest, with the banks leading $2.1 billion in loans to back the $1.86 billion cash portion of the transaction and refinancing $450 million in revolvers. Bruce DeBolt, senior v.p., and cfo of Northwest, said in a conference call that a new holding company will be formed that has financing commitments consisting of a $100 million revolver, a $150 million "A" term loan, a $500 million "B" term loan, a $300 million term loan "C" and also a $450 million capital markets tranche. Enron will provide $200 million in non-tax deductible FELINE Prides and a $50 million equity investment. "It's complicated stuff," said DeBolt.
Transaction costs for the acquisition run to $60 million. At the operating company level, Northwest will enter into a new $150 million revolver and Portland a new $300 million revolver, similar to current levels, DeBolt added. An investment grade rating is being targeted, he noted, for the new holding company. The term loans will have maturities of up to eight-and-a-half years. Pricing has not yet been decided. Merrill has had a long-standing relationship with Northwest and has built up its energy group.