GulfTerra redeems 10 3/8% notes

New York, June 2 - GulfTerra Energy Partners LP (B1/BB-) said that it redeemed the entire $175 million outstanding principal amount of its 10 3/8% senior subordinated notes due 2009.

GulfTerra, a Houston-based oil and gas pipeline operator, said that the notes were redeemed on June 1 at a redemption price of 105.188% of the principal amount, plus accrued and unpaid interest.

In connection with the redemption of the notes, the partnership will record a second-quarter charge against earnings of about $9.1 million related to the redemption premium and $3 million related to the write-off of the unamortized debt issuance costs on the notes.

GulfTerra said it also obtained a new $200 million term loan B credit facility in addition to its existing $300 million term loan B credit facility. The new $200 million term loan B was priced at a flat rate of Libor plus 2.25% and includes covenants that correspond with the existing term loan B and revolving credit facility. The proceeds of the new term loan B were used to provide liquidity by reducing outstanding debt under the partnership's $700 million revolver.

Including the redemption of the 10 3/8% notes, GulfTerra has total outstanding debt of $1.96 billion as of June 1, including $985 million of revolving credit and term loan B facilities and $922 million of still-outstanding senior unsecured and senior subordinated notes.

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