Houston-based Reliant Resources tapped relationship banks for a $2.2 billion, 364-day bridge loan to finance the planned purchase of Orion Power and will be replacing the loan with a bond deal and bank debt next year. Bill Waller, assistant treasurer for Reliant Resources, said Bank of America, Barclays Bank and Deutsche Bank lead a club of 10 banks providing the loan and the banks will get a piece of the bonds. "It was very much relationship driven. Reliant Resources conducted a competitive process among the relationship lenders," he added. Pricing and terms were the primary factors, he added. Reliant Resources provides electricity and energy services.
The total acquisition price is $2.9 billion and Reliant Resources will assume approximately $1.8 billion of debt. Waller said Reliant Resources has $800 million in capital left from an IPO earlier this year and also has two $800 million revolvers, a 364-day and a three-year facility. Bank of America and J.P. Morgan lead the revolvers, he said, with B of A, as the administrative agent. He declined to comment on why J.P. Morgan is not on the financing.
The bond issuance is planned for two to three months after the closing of the acquisition, expected in the first quarter of 2002 and plans are being formulated for bank borrowings at the subsidiary level. The senior unsecured credit facility was upsized from $1.8 billion to $2.2 billion due to oversubscription. "We were pleased to see our lenders could draw a distinction between us and other similar companies," he said, responding to a question on whether lenders are reluctant in the current market.