Energy Transfer gets $3.7 billion 364-day bridge loan for acquisition

By Susanna Moon

Chicago, Oct. 21 - Energy Transfer Equity, LP negotiated a 364-day senior bridge term loan for up to $3.7 billion with Credit Suisse AG as administrative agent on Monday, according to an 8-K filing with the Securities and Exchange Commission.

For the first 60 days, interest will be Libor plus 400 basis points, with a Libor floor of 1%. After that, the rate will be 10½% to 13% - the rate will depend on the company's credit ratings from Standard & Poor's and Moody's Investors Service - plus the lesser of 100 bps and a number of basis points based on changes in the Double-B Sector of the Credit Suisse High Yield index.

The agreement may be extended to 15 months.

Proceeds of the loans will be used to finance the merger of its subsidiary Sigma Acquisition Corp. with Southern Union Co. as well as to repay the remaining debt under its existing credit facility.

Credit Suisse Securities (USA) LLC is the arranger and bookrunner.

The company is required to maintain a maximum debt-to-EBITDA ratio of 5.5 times, a maximum net debt-to-EBITDA ratio of 6.5 times and a minimum EBITDA-to-consolidated fixed charges ratio of 1.5 times.

In case of default, there will be an additional 200 bps tacked on to the interest rate.

Energy Transfer is a Dallas-based oil and gas pipeline company.

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