Lehman Brothers and Credit Suisse are arranging $750 million in loans for MEG Energy. The deal is being used by the Canadian oil company for an undisclosed oil project in Alberta, Canada, according to a MEG spokesman. The financing comprises a seven-year, $700 million term loan and a three-year, $50 million revolver. Currently, $350 million of the term loan will be used by MEG for the company's current venture in Alberta, while the other $350 million will be drawn down within two years of the close of the transaction, one potential investor noted.
Pricing on both tranches has been talked at LIBOR plus 2 1/4%, the investor said. Standard & Poor's assigned a BB rating to the loans, along with a recovery rating of 1, which ensures the highest possibility of recovery in the event of a default. Moody's Investors Service assigned a Ba3 rating to the loan.
Based in Alberta, Canada, MEG provides gas production and development through oil sands projects in large undeveloped oil regions. MEG is then able to provide for the needs of local gas users. Calls to Dale Hohm, cfo at MEG, were not returned. Calls to Credit Suisse and Lehman Brothers were not returned.