Dynegy Holdings obtains $1.66 billion credit facility

By Sara Rosenberg

New York, April 2 - Dynegy Holdings Inc., a subsidiary of Dynegy Inc., obtained a new $1.66 billion credit facility. Salomon Smith Barney Inc., Banc of America Securities LLC, and Bank One were co-lead arrangers on the deal.

The facility consists of a $1.1 billion secured revolver due Feb. 15, 2005, a $200 million secured term loan A due Feb. 15, 2005 and a $360 million secured term loan B due Dec. 15, 2005. All tranches carry an interest rate of Libor plus 475 basis points, according to a news release.

Financial covenants include minimum liquidity of $200 million, maximum secured debt-to-EBITDA ranging from 7.8 to 1 on Sept. 30, 2003, to 5.6 to 1 on Dec. 31, 2004 (see table 1) and limitations on capital expenditures (see table 2).

Security on the revolver and the term loan A is a first priority lien on substantially all of Dynegy Holdings' available assets including generation and midstream facilities, stock of subsidiaries, cash and other current assets, subject to pre-existing liens and contractual restrictions. Security on the term loan B is a second priority lien on Dynegy Holdings' assets, also subject to pre-existing liens and contractual restrictions.

Proceeds will be used to provide funding for the ongoing collateral needs of existing businesses and general corporate purposes. The new facility replaces the company's existing $900 million revolver due April 28, $400 million revolver due May 27 and a $360 million communications lease due in December 2005.

"We are extremely pleased that, with the full support of our bank team, we were able to complete our refinancing arrangements on acceptable terms well in advance of the maturity dates," said Bruce A. Williamson, president and chief executive officer of Dynegy Inc., in the release. "Importantly, these new facilities preserve our substantial liquidity, allow us to continue to restore confidence with our employees, customers and suppliers, and provide us with flexibility to build shareholder value."

Dynegy is a Houston producer and deliverer of energy.

Table 1: Dynegy's secured debt to EBITDA covenant

Measurement period ending Maximum secured debt/ EBITDA ratio

Sept. 30, 2003 7.8:1.0

Dec. 31, 2003 7.8:1.0

March 31, 2004 7.2:1.0

June 30, 2004 6.8:1.0

Sept. 30, 2004 6.0:1.0

Dec. 31, 2004 and each fiscal quarter after that 5.6:1.0

Table 2: Dynegy's capital expenditure covenant

Fiscal quarter ending Maximum amount of capital expenditures

Dec. 31, 2003 $232 million

March 31, 2004 $202 million

June 30, 2004 $206 million

Sept. 30, 2004 $208 million

Dec. 31, 2004 and each fiscal quarter after that $222 million

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