BNP Paribas and Credit Suisse First Boston last week launched general syndication of a $1.25 billion loan for Sithe Energies, Inc. after raising roughly $1.2 billion in the primary round. Looking to bring down the allocations to the primary round lenders, the banks are looking for $50 million commitments at 75 basis points for top top-tier managing agent roles, $35 million commitments for co-manager slots at 65 basis points, and $25 million for participant slots paying 40 basis points. Credit Lyonnais is the documentation agent on the deal.
One banker said European investors, including primary round participants Fortis, Bank of Scotland, Abbey National, and Hypovereinsbank, have shown a lot of interest in the deal. "Europeans like the U.S. power sector and with consolidation in the U.S. there are only so many domestic banks that can get in on the deal," he noted. Other participants include Bank of Tokyo-Mitsubishi, Toronto-Dominion Bank, and Bank of Nova Scotia.
The seven-year project finance credit terms out after a two-year construction period. Pricing for the first two years is LIBOR plus 13Ž 8%, based on an investment-grade rating. If the company does not receive an investment grade rating after the first two years, pricing will reflect a leveraged position. "They need to get an investment-grade rating in the first two years or they'll be penalized in years three and four," said the banker. Years three and four are priced at LIBOR plus 145 basis points for investment grade and LIBOR plus 165 basis points if the company has non-investment grade status. During years five through seven, investment-grade pricing is LIBOR plus 13Ž 4% and for non-investment grade it is LIBOR plus 2%.
The credit comprises a $62 million letter of credit, a $40 million working capital piece, and a $1.148 billion term loan. Equity represents 46% of the capital structure of the credit with $929.5 million in equity up front and $50.6 million of contingent equity.