Pricing on a Morgan Stanley and Goldman Sachs-led $950 million financing for US Power Generating, known in the market as Astoria Generating, has been flexed down. The package bankrolls the acquisition of generating assets from Reliant Resources for $975 million, according to Power Finance & Risk, a CIN sister publication (PFR, 10/3). Market observers suggest pricing was reduced as a result of heightened demand. Pricing on the two-tranched financing package stands at LIBOR plus 2% from 2 1/4% on the first lien. That will drop again to LIBOR plus 1 3/4% once $100 million of the debt is paid off, watchers said. The second tranche carries pricing of LIBOR plus 3 3/4% reduced from 4 1/2%. The funding is expected to close late this week.
Officials at the lead banks did not return calls for comment. Jay Worenklein, head of US Power in New York, declined comment and David Mosher, managing director at Madison Dearborn in Chicago, did not return a call.
The loan consists of a $430 million term loan "B," expiring in 2013, a $100 million working capital facility, expiring in 2012, and a $120 million synthetic letter of credit, expiring in 2011. A $300 million term loan "C," expiring in 2013, makes up the second tranche (PFR, 1/23).