Reliant Energy expects to use proceeds from the $975 million sale of its Orion New York assets to pay off $638 million of a "B" loan. "My sense is that probably most of the proceeds are going to end up going against the term loan B," Mark Jacobs, cfo, said on a third-quarter conference call last week. He added the company has to pay off the loan, which carries a 6% interest rate, before it can pay off $550 million of callable 9.5% notes that mature July 2013 because of requirements in its financing agreements.
Jacobs also said Reliant would have opportunities in mid-2007 and mid-2008 to call the 9.5% notes and could refinance if rates were still lower at that point. Calls to Jacobs were not returned. Reliant's "B" loan traded down last week after the company announced disappointing third quarter numbers (see related story, page 8). Madison Dearborn and US Power Generating won the bidding contest for the generation portfolio, which includes the 1.2 GW Astoria complex as well as a 281 MW gas-fired plant in Narrows and a 549 MW facility in Gowanus.