Syndication is said to be going well for Transwestern Pipeline Co.'s $550 million refinancing. The deal is fully underwritten and led by Wachovia Securities and SunTrust Bank. "I have the sense it will go quite well," a loan investor said. "People like pipelines, it has a very good capital structure." The deal, which launched last Tuesday after a delay due to Enron's court case, was originally set to hit the market in January (LMW, 1/12). "You could have had your analysis done a while ago," one loan investor noted.
Transwestern was indirectly owned by Enron and was not a debtor in Enron's bankruptcy. Enron's equity interest in Transwestern was transferred into a newly formed intermediate holding company CrossCountry Energy, which is now Transwestern's parent company.
Proceeds from the new facility will be used to repay $436 million of outstanding bank debt and to help fund a $150 million San Juan expansion. The facility comprises a four-year, $150 million revolver and five-year, $400 million "B" loan. Both are being talked at LIBOR plus 21/2%. Bank covenants include leverage of 4.5 times, stepping down to four times in 2006 and EBITDA-to-interest of 2.75 times, stepping up to three times in 2005. Transwestern is expected to have leverage and EBITDA-to-interest in the three times range, according to Moody's Investors Service. Wachovia and SunTrust bankers did not return calls and a Transwestern spokesman declined comment.