Atlas Pipeline Partners, an indirect subsidiary of Resource America, has completed a new $135 million credit, dramatically increasing the size of its previous line. The company previously had a $20 million revolver, which only had two lenders--Wachovia Securities and Key Bank. The new credit meanwhile brings 10 new lenders to the syndicate. "It broadens our exposure to the lending community," noted Steven Kessler, senior v.p. and cfo of Resource America. The new credit currently comprises a $100 million "B" loan and $35 million revolver.
Proceeds of the loan were used to back the $140 million acquisition of Spectrum Field Services and will be used for potential future acquisitions as well, Kessler said. "We now have additional capital to do other acquisitions." The term debt is beneficial because it gives the company a fixed amount of capital, Kessler added. The revolver and term loan are priced on a grid based on the company's leverage ratio. The revolver spread ranges from LIBOR plus 2-3 1/4%, while the term loan spread is LIBOR plus 2 3/4-4%. Wachovia and Key led the new credit. "We thought the banks did a great job," he enthused.
The company also completed a $69.5 million equity offering. Lehman Brothers led the offering and proceeds will be used to pay off some of the costs associated with the acquisition. The term loan will be reduced by $40 million and the revolver will increase by that amount. The revolver will then be $75 million with a $40 million accordion feature, giving the company $115 million of additional borrowing capacity.