Dynegy joint venture secures $400 million bridge loan for acquisition

By Lisa Kerner

Charlotte, N.C., Feb. 25 – Dynegy Inc. and Energy Capital Partners announced they will use a $400 million junior bridge facility from Energy Capital to help fund their joint venture’s $3.3 billion acquisition of Engie’s U.S. fossil portfolio.

The bridge facility has no upfront fees, no prepayment penalties and is priced at 11% with a payment-in-kind option for quarterly interest payments.

The bridge facility, if not refinanced prior to 12 months after the transaction closing, may be repaid on a pro rata basis by the members, converted into equity of the joint venture or remain outstanding through the fourth anniversary of closing at a higher rate of interest.

The transaction is expected to close in the fourth quarter, according to a news release.

Dynegy and Energy Capital will invest about $770 million and $415 million, respectively, in the joint venture.

Dynegy’s investment also will be funded by $150 million of proceeds from a sale of common stock to Energy Capital, $200 million from the forward sale of PJM capacity and $420 million from general corporate liquidity, the release stated.

The joint venture has also secured $1.85 billion of secured debt financing from a consortium of relationship banks.

Dynegy and Energy Capital expect to replace the bridge facility and the secured debt financing with permanent financing.

Dynegy is a Houston-based energy company. Energy Capital is a private equity firm based in Short Hills, N.J.

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