Richmond, Va.-based Dominion Resources, one of the nation's largest producers of energy, will use a bridge loan to finance the acquisition of Louis Dreyfus Natural Gas prior to putting in place $900 million in bonds and $200 million in preferred trusts. The acquisition is being made for $2.3 billion in cash, stock and assumed debt. Merrill Lynch, who advised on the transaction is believed to be leading the financing. Officials at Merrill could not be reached for comment. Scott Hetzer, senior v.p. and treasurer did not return calls. Calls to spokesman Mark Lazenby were not returned. Advisers on the transaction were Merrill Lynch to Dominion and Lehman Brothers to Louis Dreyfus.
In a conference call, Thos Capps, chairman, president and ceo of Dominion, said, explaining the timing behind the acquisition, "currently people are bearish on the natural gas industry, at least in the short-term. A great investor once made the observation, the best time to create real value is to buy when most others are selling. When the pundits or so-called experts say zig, then that is the time to zag," he noted. The rate on the bridge loan will be 5% all-in, said Capps. Dominion will assume $505 million of Louis Dreyfus debt and $205 million will be left in place, he added.