FS Energy unit gets $200 million revolver; two more to issue floaters

By Toni Weeks

San Luis Obispo, Calif., Sept. 15 – FS Energy and Power Fund subsidiary Wayne Funding LLC entered into a $200 million revolving credit facility on Sept. 9 with Wells Fargo Securities, LLC as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Wells Fargo Bank, NA is the collateral agent, account bank and collateral custodian for the facility, which matures Sept. 9, 2019.

The interest rate is Libor plus 250 basis points to 275 bps based on the composition of the company’s asset portfolio for the relevant period. There will be a non-usage fee beginning Oct. 10.

Newly formed, wholly owned special purpose financing subsidiary Wayne Funding will acquire a portfolio of cash, loans or bonds that are contributed by FS Energy or purchased from other sources, the filing said, with FS Energy serving as manager of the portfolio. Wayne’s obligations under the facility are secured by a first-priority security interest in all the assets of Wayne Funding, including its portfolio of assets.

In connection with the facility, FS Energy must maintain an asset coverage ratio of at least 2 to 1 and have a net asset value of at least $300 million. Borrowings of Wayne Funding will be considered borrowings of FS Energy for purposes of complying with the asset coverage requirement.

Two more financing vehicles

FS Energy also entered into an up to $225 million debt financing arrangement with Goldman Sachs Bank USA on Sept. 11 through two additional newly formed, wholly owned, special-purpose financing subsidiaries: Gladwyne Funding LLC and Strafford Funding LLC.

Pursuant to the financing arrangement, assets in FS Energy’s portfolio may be sold to newly formed Gladwyne Funding. Under the agreement, FS Energy has contributed a portfolio of assets to Gladwyne with a value of about $427.1 million, which will secure the obligations of Gladwyne under floating-rate notes to be issued from time to time by Gladwyne and Strafford. Pursuant to the indenture, Gladwyne may issue up to $400 million of notes, which will mature on Dec. 1, 2024. Citibank, NA will be the trustee.

Interest on the notes will accrue at Libor plus 400 bps.

Strafford Funding has entered into a repurchase transaction with Goldman, under which Goldman will purchase notes during the three months ending Dec. 15 for a price of 56.25. Goldman may purchase a maximum of $400 million of notes, thus the maximum amount payable to Strafford will not exceed $225 million due to the discounted price.

The filing noted that Goldman has already purchased a $25 million note on Sept. 15 for $14.1 million. Strafford intends to enter into additional repurchase transactions under the Goldman Sachs facility before Dec. 15.

Strafford will repurchase the notes sold to Goldman under the facility no later than Sept. 15, 2017 at the same price that Goldman paid, plus financing fees of Libor plus a margin of up to 275 bps.

If the market value of the notes declines and is less than the required margin amount of the Goldman facility, Strafford will borrow funds from FS Energy pursuant to an uncommitted revolving credit agreement entered into on Sept. 11, under which FS Energy may make up to $225 million of loans from time to time to Strafford. Interest will accrue at one-month Libor plus 75 bps.

FS Energy is a Philadelphia-based investment company that invests primarily in income-oriented securities of privately held energy- and power-related companies.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.