Great Plains Energy nixes bridge loan for Westar Energy acquisition

By Angela McDaniels

Tacoma, Wash., July 10 – Great Plains Energy Inc., Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC terminated their commitment letter for an $8,017,000,000 364-day senior bridge loan, according to an 8-K filing with the Securities and Exchange Commission.

The bridge loan consisted of a $7,517,000,000 senior term loan, which was going to be used to fund the acquisition of Westar Energy Inc., and a conditional $500 million senior term loan, which was going to be used for working capital purposes.

On Monday, the companies announced changes to the merger transaction, which will now be a stock-for-stock merger of equals. It involves no premium paid or received with respect to either company, no transaction debt and no exchange of cash.

Westar Energy shareholders will receive common stock in a new holding company in exchange for their Westar Energy common stock. Following completion of the merger, Westar Energy shareholders will own 52.5% and Great Plains shareholders will own 47.5% of the combined company.

Plans for the acquisition were announced in May 2016. Under the terms of the original merger agreement, Great Plains planned to pay $8.6 billion for Westar’s common stock – or $51.00 of cash and $9.00 of Great Plains common stock per share of Westar common stock, subject to a 7.5% collar – and to assume about $3.6 billion of Westar’s debt.

In addition to the bridge loan commitment, Great Plains had also secured a $750 million mandatorily preferred convertible equity commitment from the Ontario Municipal Employees Retirement System. It had planned to issue long-term financing consisting of a combination of equity, equity-linked securities and $4.4 billion of new Great Plains debt prior to closing of the transaction.

Great Plains Energy will now redeem all of the previously issued debt and convertible preferred stock it issued in connection with the original merger agreement, and the preferred convertible equity commitment from the Ontario Municipal Employees Retirement System has been terminated.

The transaction is now expected to close in the first half of 2018.

Great Plains Energy is based in Kansas City, Mo. It is the holding company of Kansas City Power & Light and KCP&L Greater Missouri, two regulated providers of electricity.

Westar Energy is a Topeka, Kan.-based electric utility.

© 2015 Prospect News.
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