Midcoast Energy Partners inks $850 million three-year revolver

By Toni Weeks

San Luis Obispo, Calif., Nov. 18 - Midcoast Energy Partners, LP entered into a credit agreement providing for an $850 million committed senior revolving credit facility with a $90 million sublimit for letters of credit and a $75 million sublimit for swingline loans, according to an 8-K filing with the Securities and Exchange Commission.

The company arranged the facility on Nov. 13 with subsidiary Midcoast Operating, LP as co-borrower and a guarantor in connection with the completion of its initial public offering of 18.5 million class A common units. Bank of America, NA is the administrative agent, letter-of-credit issuer and swingline lender. Citibank, NA is the syndication agent. Royal Bank of Scotland plc, Canada Branch is the documentation agent. BofA Merrill Lynch, Citigroup Global Markets Inc. and RBS Securities Inc. are the lead arrangers and bookrunners.

Commitments may be increased to $1 billion via an accordion feature.

The facility matures in three years, subject to four one-year requests for extensions.

Loans under the facility bear interest at Libor plus 175 basis points to 275 bps, with the exact margin based on leverage. There is a commitment fee of 30 bps to 50 bps and a letter-of-credit fee that will equal the applicable margin over Libor.

Under the agreement, the company may not permit the ratio of consolidated funded debt to pro forma EBITDA to exceed 5.0 to 1.0 as of the end of any applicable four-quarter period during acquisition periods. In addition, the company must maintain on a consolidated basis a ratio of pro forma EBITDA to consolidated interest expense of 2.5 to 1.0 as of the end of each applicable four-quarter period.

Houston-based Midcoast is an oil and gas production and transportation company.

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