UBS is leading a $400 million facility for Regency Gas Services that will amend and restate existing debt while adding $110 million to fund the buildout of a gas pipeline in Louisiana. Regency is a Dallas-based midstream gas gathering, processing and transmission company owned by Hicks, Muse, Tate & Furst.
The credit consists of a $90 million revolver, a $248 million first lien and a $62 million second lien. Pricing on the revolver and first lien is LIBOR plus 2 3/4% and pricing on the second lien is LIBOR plus 6%. "We are in the process of amending and restating and expanding amounts," Stephen Arata, executive v.p. and cfo, said. "It was a much simpler process than putting in a new facility."
UBS led the loans backing Hicks, Muse's $405 million acquisition of Regency from Charlesbank Capital Partners last November. These consist of a $40 million revolver, a $160 million first lien and an $80 million second lien (LMW, 11/5).
In early June the company announced it will extend its existing intrastate gas pipeline located in northern Louisiana. The project is expected to cost about $125 million; Hicks, Muse will kick in the other $15 million. Additional extensions are expected to be completed by the end of the year. This is the first major capital project Regency has launched since the buyout. The company is now focused on organic growth as opposed to acquisitions. "We're clearly evaluating a lot of opportunities, but at this point, [there is] nothing on the board as big as this project," Arata said.
The company is reportedly planning an initial public offering using a master limited partnership structure. One source said the company is looking at the opportunity based on where the market is, but no definite decisions have been made. Arata would not comment on the subject.
Charlesbank and company management formed Regency in June 2003 to purchase natural gas gathering, processing and pipeline assets from El Paso Energy as well as Duke Energy. A spokesman for Hicks, Muse had no comment.