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AmeriGas to finance part of acquisition with $1.5 billion debt
By Aleesia Forni
Columbus, Ohio, Oct. 17 - AmeriGas Propane Inc. will obtain $1.5 billion of debt financing to fund part of the $2.9 billion acquisition cost of the propane operations of Energy Transfer Partners LP.
Though the company is unsure of the overall structure of the financing, chief financial officer John Iannarelli expects the Valley Forge, Pa.-based retail propane marketer to upsize its existing credit facility to about $500 million.
"Our first structuring event is to do the equivalent of a rain dance and hope credit markets improve," chief executive officer Lon Greenberg said during the company's conference call to announce the acquisition on Monday.
"It's been a volatile market out there," Greenberg continued. "Fortunately, AmeriGas has a very good name."
AmeriGas structured this transaction to ensure the company will maintain its current credit rating.
The acquisition cost includes AmeriGas' assumption of $71 million of the debt of Energy Transfer's subsidiary, Heritage Operating LP.
The transaction is expected to close in late 2011 or early 2012.
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