Crosstex Energy has combined two expiring credit lines and upsized capacity in a single $250 million revolver. The Dallas mid-stream natural gas entity wanted to have more dry powder for potential acquisitions and the low-interest rate environment means it could get that relatively cheaply, said Joe Ragusa, treasurer. "This is an opportunity to expand our line at a reasonable cost as we prepare for growth," he noted, adding the line also will support a roughly $100 million planned development of a 122-mile North Texas pipeline project in the Barnett Shale region. The revolver also has an accordion feature which allows for an additional $100 million of capacity at no cost until utilized.
The original lines, which were both set to mature June 2006, consisted of a $100 million facility and an equally-sized line that could be used as a letter of credit. The facilities were priced based on a matrix tied to Crosstex's debt-to-EBITDA ratio and had a spread range of 25-250 basis points. Similar to the old line, the new five-year revolver can be priced over the prime rate or LIBOR, depending on where interest rates are at the time, noted Ragusa.
Pricing on the new revolver, also pegged to debt-to-EBITDA, ranges from 0-175 basis points over the prime or LIBOR rates.
Bank of America administrative agent led the credit line with Union Bank of California serving as syndication agent. Both have worked on previous facilities for the company. Citigroup, Comerica Bank, KeyBank and SunTrust Bank have been brought on as new participants, Ragusa, added, explaining the lenders asked Crosstex, in advance of its expansion of the line, to be included in any retooling of the facility. BNP Paribas, Guaranty Bank, Royal Bank of Canada and U.S. Bank National Association are also participating.