BP’s $4.1 billion acquisition of Archaea to include $800 million of debt

Chicago, Oct. 17 – Archaea Energy Inc. announced that the $4.1 billion total enterprise value of its acquisition by BP America includes approximately $800 million of net debt, according to a press release.

According to Archaea’s second-quarter 10-Q filing, on June 30 the company amended its revolving credit and term loan agreement, which included a senior secured revolver with an initial commitment of $250 million and a senior secured term loan with an initial commitment of $220 million. The amendment, among other things, increased the total commitment from the original syndicate of lenders plus two additional lenders by about $630 million to a total of $1.1 billion and provided for a $400 million term loan and a $700 million revolver.

Also on June 1, the benchmark interest rate was revised to SOFR plus 275 basis points for the revolver and SOFR plus 325 bps for the term loan. The maturity date of the credit facilities remained Sept. 15, 2026.

The company had outstanding borrowings under the term loan of $400 million at an interest rate of 4.89% and under the revolver of $50 million at an interest rate of 4.39%. It had issued letters of credit of $23.8 million, resulting in available borrowing capacity of $626.2 million under the revolver as of June 30.

The acquisition transaction is expected to close by the end of 2022.

Upon completion of the transaction, Archaea will operate as a subsidiary within BP and become part of the larger global organization.

BofA Securities acted as financial adviser to Archaea and Kirkland & Ellis LLP acted as Archaea’s legal adviser.

Morgan Stanley & Co. LLC is acting as financial adviser to BP and Freshfields Bruckhaus Deringer as lead legal adviser to BP.

Archaea is a Houston-based renewable natural gas producer.

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