Pacific Energy sets Thursday launch for $700 million credit facility

By Sara Rosenberg

New York, July 18 - Pacific Energy Partners LP has scheduled a bank meeting for Thursday to launch its proposed $700 million credit facility, according to a market source.

Bank of America and Lehman Brothers are the lead banks on the deal, with Bank of America the left lead.

The facility consists of a $400 million five-year secured revolving credit facility and a $300 million 364-day revolving bridge facility, with price talk on the tranches expected to emerge at launch, the source said.

Proceeds from the facility will be used to help fund the company's $455 million acquisition of some terminal and pipeline assets from subsidiaries of Valero LP.

Pacific Energy has previously said that it hopes to avoid using the 364-day bridge loan by issuing equity and bonds. The company hopes to permanently finance the acquisition with 60% to 65% equity - a minimum of $275 million - and the balance in debt.

The new five-year revolver will also be used to refinance the company's existing U.S. and Canadian revolving credit facilities.

The company is targeting an initial leverage ratio of 4½ times following the close of the transaction.

Assets being acquired include the Martinez Terminal and the Richmond Terminal in the San Francisco area, the North Philadelphia Terminal, the South Philadelphia Terminal, the Paulsboro, N.J., terminal and the West Pipeline System in the U.S. Rocky Mountains.

For acquired assets during full-year 2006, Pacific is forecasting EBITDA of about $42 million.

Pacific Energy Partners is a Long Beach, Calif., master limited partnership engaged in the business of gathering, transporting, storing and distributing crude oil and other related products.

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