A $4.7 billion refinancing for CenterPoint Energy, previously Reliant Energy, was pulled from the fire in the wee hours of Friday morning after tough terms were demanded by the banks. As first reported on LMW's Web site, the company secured the crucial refinancing after blowing its original deadline of Thursday at 5 p.m. West LB was the sole holdout as the deadline passed, but the bank ended up coming in on the deal, quashing the threat of a potential Chapter 11 filing. A spokesman for CenterPoint said WestLB and 29 other banks agreed to the new financing. The company is required to raise $400 million of third-party capital to replace maturing debt and, if the capital is not raised, the credit facilities will mature on Nov. 15 this year.
J.P. Morgan and Citibank led the refinancing, which due to a series of factors has been painful. The Enron debacle, the downgrading of the credit ratings of several energy companies and banks' exposure to energy companies all adversely affected CenterPoint's ability to refinance, one banker explained. Spreads on the new CenterPoint loan have risen to compensate for the risk, with the $3.85 billion 364-day revolver priced at LIBOR plus 4%, a 1% increase over the current line. This facility will be reduced by $600 million in February and by another $600 million in June. A second facility at the company's electric transmission and distribution subsidiary, CenterPoint Energy Houston Electric, is an $850 million 364-day line priced at LIBOR plus 3%, stepping up to LIBOR plus 312 % once $450 million is drawn.
The spokesman confirmed West LB was the bank holding up the financing, but he denied talk that a bankruptcy filing was possible. He added that the deadline was malleable and would stretch into the night. One banker countered, "It's an ugly credit, but they needed to refinance or file." Officials at the banks could not be reached by press time.