CenterPoint, OGE Energy joint venture gets $2.45 billion of loans

By Angela McDaniels

Tacoma, Wash., May 7 - CenterPoint Energy Field Services, LLC entered into a $1.05 billion three-year senior term loan and a $1.4 billion five-year senior revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The borrower is a joint venture formed by OGE Energy Corp., CenterPoint Energy, Inc. and two affiliates of ArcLight Capital Partners, LLC to own and operate the midstream businesses of OGE and CenterPoint Energy subsidiary CenterPoint Energy Resources Corp.

CenterPoint Energy Resources has provided a guarantee for the term loan but not the revolver.

The initial interest rate is Libor plus 162.5 basis points. The margin over Libor ranges from 125 bps to 200 bps depending on the borrower's ratings.

The initial commitment fee for the revolver is 25 bps. It ranges from 15 bps to 335 bps.

The revolver has a $700 million accordion feature.

Up to $400 million of the revolver is available for letters of credit, and up to $100 million is available for swingline loans.

Citibank, NA is the administrative agent, and UBS Securities LLC is the syndication agent. JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are the documentation agents.

Citigroup Global Markets, Inc., UBS Securities LLC, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the lead arrangers and bookrunners.

The proceeds of the term loan were used to repay $1.05 billion of intercompany debt owed to CenterPoint Energy Resources by a predecessor entity of the borrower.

Advances under the revolver were used to refinance Enogex LLC's $400 million revolving credit facility, which was terminated, and existing debt owed by Enogex to OGE and for general corporate purposes.

The credit facilities closed on May 1. As of that date, there was $107.1 million in principal advances and about $2 million of letters of credit outstanding under the revolver.

The term loan and revolver contain a financial covenant requiring the borrower to maintain a ratio of consolidated funded debt to consolidated EBITDA of no more than 5.0 to 1.0. This cap rises to 5.5 to 1.0 for a certain period of time following the consummation or one or more related acquisitions with a purchase price of at least $50 million in the aggregate.

OGE Energy and CenterPoint formed the joint venture with ArcLight affiliates Bronco Midstream Holdings, LLC and Bronco Midstream Holdings II, LLC.

Oklahoma City-based OGE Energy is the parent company of Oklahoma Gas and Electric Co., a regulated electric utility, and OGE Enogex Holdings LLC, which indirectly owns a majority share in Enogex. Enogex is a midstream natural gas pipeline business.

CenterPoint is a Houston-based energy delivery company.

ArcLight Capital Partners is an energy-focused private equity investment firm based in Boston.

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