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| Ralph Todaro |
Stamford, Conn.-based Sempra Energy Trading, a subsidiary of Sempra Energy Global Enterprises, completed its first credit facility at the Sempra Energy Trading level. San Diego-based Sempra Energy acquired the energy trading unit in 1998 from AIG Trading Corp. The new credit is a two-year, $1 billion revolver led by BNP Paribas. "We've been working on this for quite a while," noted Ralph Todaro, Sempra Energy Trading's cfo. "Sempra's strategy was to eventually have enough substance and equity built up in the business so it could be viewed as a standalone credit." There are no plans to spin off the company, but it would like to be viewed in the marketplace like a separate company, he added.
"The reason that we did this is to provide a committed source of liquidity and additional financial flexibility to support our growing business," Todaro said. "It gives us a lot of flexibility to issue letters of credit to borrow cash for margin purposes or collateral and it provides an additional source of working capital so we can continue to grow."
In addition to BNP Paribas' lead rate, there were significant commitments by ABN AMRO and Standard Chartered Bank. "Early on we talked to several financial institutions about our thoughts for this type of facility. We just thought BNP Paribas had a good reputation in the market for being able to bring together some more challenging facilities--we felt this was one," Todaro said. "We were very impressed with the people they placed on the whole facility." He declined to comment on the spread but said, "We think it's very competitively priced." Marcie Weiss and Ann Catherine Mathiot were the bankers who worked on the credit.
Sempra Energy Trading is one of the few energy trading companies that are left in the business, Todaro noted. "The company has been very successful financially in terms of growing our markets and products," he said. "We've been able to weather the tough financial times. Our track record has been able to enable us to put this thing together."