El Paso Corp.'s bank debt levels held firm in the 981Ž2-99 range last week after the company announced its long-term plan and decision to sell off its interest in GulfTerra Energy Partners. The name is believed to have traded in that context. But Standard & Poor's lowered the company's corporate credit rating after the plan was announced from B+ to B, noting that "heightened risks during the transition period necessitate a lower credit rating." Moody's Investors Service confirmed El Paso's ratings, but retained its negative outlook. Still, the market viewed the company's plans positively despite the downgrade, noted one dealer.
El Paso's long-term business plan includes reducing the company's debt by about $15 billion by the end of 2005, completing $3.3 billion to $3.9 billion in asset sales and streamlining operations. El Paso will also sell its 50% interest in the general partner GulfTerra, about 14 million GulfTerra common units and certain processing assets as a part of the merger of GulfTerra and Enterprise Products Partners. These sales are expected to generate $1 billion that will be directed to El Paso's debt restructuring program.
El Paso completed a new $3 billion revolver in April. J.P. Morgan and Citigroup are the joint bookrunners and co-lead arrangers for the deal with ABN Amro, Bank of America and Credit Suisse First Boston holding titles on the credit as well. The revolver is priced at LIBOR plus 31Ž2% with a commitment fee of 75 basis points. Company officials could not be reached by press time and a spokesperson did not return calls.