Reliant Resources refinances $1.57 billion in credit facilities

New York, Oct. 29 - Reliant Resources, Inc. said it refinanced three credit facilities totaling $1.57 billion.

The transactions extend maturities by three years and cover its Orion Power Holdings, Inc., Orion Power MidWest LP and Orion Power New York LP subsidiaries.

Announcement of the refinancings follows a one-day extension on the Oct. 28 deadline for refinancing Orion Power MidWest's credit facility.

"We are very pleased to have reached a mutually beneficial refinancing agreement with the Orion lenders, which represents an important first step in Reliant Resources' overall refinancing activities," said Mark Jacobs, executive vice president and chief financial officer of the Houston electricity and energy company, in a news release. "We have achieved a three-year extension that creates financial and operating stability for all of the Orion entities and will allow us to maximize the value and profitability of these assets over time."

Net of restricted cash, the new facilities are a $974 million term loan and $75 million revolver for Orion Power MidWest and a $353 million term loan and $30 million revolver for Orion Power New York. (A third small facility was not replaced one-for-one with a new facility.) Interest rate swaps totaling $950 million were also extended.

Interest rates are Libor plus 250 basis points for the first 12 months, Libor plus 275 basis points for 12 to 18 months, Libor plus 325 basis points for 18 to 24 months and Libor plus 375 basis points after that.

Upfront fees were 150 basis points on the Orion Power New York loan and 100 basis points on the Orion Power MidWest pieces.

Lenders also received cross-collateralization, with the Orion Power MidWest facility benefiting from a second lien on the assets of Orion Power New York and vice versa.

There will be an allowance for a $24 million dividend to pay the Nov. 1 coupon on Orion Power Holdings' 12% notes but further dividends will be "substantially limited" by covenants. Reliant described this arrangement as "consistent with the pre-existing setting whereby dividends from Orion Power MidWest and Orion Power New York were substantially limited."

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