LS Power, Global Infrastructure plans $2 billion debt facility for TransAlta bid

By Sara Rosenberg

New York, July 21 - The buyout proposal for TransAlta Corp. by LS Power Equity Partners and Global Infrastructure Partners is backed by a $2 billion debt facility commitment, according to an SC 13D/A filed with the Securities and Exchange Commission Monday.

In addition, the companies have also received a commitment for a $1.5 billion backstop credit facility, if necessary, to refinance TransAlta's existing commercial bank facility and the recently issued $500 million of senior notes should the holders exercise their change-of-control put.

Credit Suisse is the lead bank on the proposed debt.

Under the buyout bid, LS Power and Global Infrastructure are offering to purchase TransAlta for C$39 per share in an all-cash transaction, structured through a plan of arrangement.

Other financing for the transaction would come from about $6 billion of equity.

The new $8 billion equity and debt financing would not subordinate any of TransAlta's existing debt or lenders.

In addition, the financing plan is designed so as to not affect the investment-grade rating of TransAlta Utilities.

LS Power and Global Infrastructure said in the filing that they have completed due diligence based on publicly available information and would require only a short period of confirmatory due diligence to finalize their offer.

The non-binding proposal is subject to, among other things, the satisfactory completion of confirmatory due diligence, the negotiation and execution of a definitive agreement on mutually agreeable terms and the receipt of any necessary corporate and other third party approvals, including the approval of TransAlta's board of directors and shareholders.

LS Power and its affiliates currently hold 9% of TransAlta's common stock.

TransAlta is a Calgary-based producer and seller of electric energy. LS Power is a New York-based owner and operator of power generation assets. Global Infrastructure is a fund that invests in infrastructure companies and assets.

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