Texas Genco price talk surfaces ahead of retail launch

By Sara Rosenberg

New York, Oct. 25 - Texas Genco Holdings Inc.'s proposed $2.2 billion credit facility emerged with the $900 million seven-year term loan B and the $475 million seven-year delayed-draw term loan B talked at Libor plus 275 basis points and the $325 million five-year revolving credit facility, $200 million five-year letter-of-credit facility and $300 million five-year "special" letter-of-credit facility talked at Libor plus 250 basis points, according to a market source.

The deal is expected to launch to retail investors via a bank meeting sometime next week, although a specific day has not been determined. The deal already launched to senior managing agents on Oct. 12 and was pushed off from launching this week.

Goldman Sachs, Deutsche Bank, Morgan Stanley and Citigroup are lead banks on the deal, with Goldman listed on the left.

Proceeds, combined with proceeds from a proposed bond deal, will be used to help fund GC Power Acquisition LLC's acquisition of Texas Genco from CenterPoint Energy Inc. for $3.65 billion in cash.

GC Power Acquisition LLC is a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group.

The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter, involves Texas Genco's purchase of the 19% of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants.

In the second step, which is expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility.

Texas Genco is a Houston wholesale electric power generating company.

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