Cleco Corp. has obtained $185 million in credit facilities, downsizing its existing bank lines and taking advantage of current market conditions to put in place $175 million of longer-term debt. "It reduces refinancing risk and ensures liquidity," said Kathleen Nolen, Cleco's treasurer, about the benefits of longer-term debt. At the Cleco Corp. level, the company now has a $105 million, 364-day revolver and $100 million in 7%, five-year senior bonds. In addition, the company's utility unit Cleco Power obtained an $80 million, 364-day revolver and $75 million in 53/8%, 10-year senior bonds.
The new debt replaces a $225 million revolver at the holding company level and a $107 million revolver at the utility level. In total, the new financing package is slightly larger than the company's previous deals. The new credits were oversubscribed so the company decided to take advantage of the extra commitments, Nolen explained. Bank of New York is the lead arranger on both facilities and has been Cleco's relationship bank for a number of years.
The new holding company revolver is priced at LIBOR plus 15/8% and the utility revolver is priced at LIBOR plus 11/4%. Cleco Power's revolver carries a slimmer spread because the paper has a stronger credit rating and is closer to both the assets and the cash flow, explained Nolen. The former credits were priced at LIBOR plus 11/4% and 1%, respectively. Nolen said Cleco finances each entity separately to manage the financing in line with regulations as well as maximize the return to shareholders and minimize the cost to customers.