Southern Co. details $8.1 billion senior bridge facility via Citigroup

By Marisa Wong

Morgantown, W.Va., Oct. 1 – The Southern Co. entered into a senior unsecured bridge credit agreement on Sept. 30 with Citigroup Global Markets Inc. as lead arranger and Citibank, NA as administrative agent.

The company had entered into a commitment letter as part of its proposed acquisition of AGL Resources Inc. under a previously disclosed agreement and plan of merger dated Aug. 23.

The bridge agreement provides for total loan commitments of $8.1 billion to fund the cash portion of the acquisition.

The bridge loan will be automatically reduced on a dollar-for-dollar basis by cash proceeds of debt and equity issuances as well as asset sales, provided that the proceeds of any single transaction or series of related transactions exceed $100 million and the aggregate amount of all such proceeds are in excess of $250 million.

If funded, the loan will mature 364 days after the closing date.

In connection with the bridge agreement, Southern will pay a ticking fee to the lenders, accruing from Nov. 21 in an amount equal to 0.125% per year through the earlier of the date of termination of the commitments and the closing date.

If the loan is funded, the company will pay interest at Libor plus 87.5 basis points to 175 bps, depending on debt ratings.

The agreement contains covenants mostly based upon the company’s existing revolving credit agreement dated Aug. 11, including a requirement that the ratio of debt to capitalization be less than or equal to 0.70 to 1.0.

Southern is an Atlanta-based utility.

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