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Current Page:1 Dynegy’s $300M LC Tackles Price Hikes06-25-2008 | Source: Power Finance & Risk - Click here to take out a FREE Trial People & Companies in the News style=""> style="">Dynegy Holdings closed on a new, $300 million unsecured bilateral contingent letter of credit facility last week, anticipating potential rising natural gas prices next year. "You can point to the rising commodity price environment. We saw that and thought we should get ahead of that," says Rick Evans, v.p. of finance and assistant treasurer in Houston. "It'll give us a chance to pursue additional commercial opportunities that we might not otherwise have been able to pursue." style=""> style="">The LC, which accrues interest at 3.2% annually, becomes available if the price of natural gas next year rises above $13 per MMBtu and provides $40 million for each dollar increase over that. "It's a contingent facility, so if prices rise then it kicks in," says Evans, adding, "Our objective was to have something in place that would deliver incremental liquidity in that scenario." He declined to comment on how the company decided on the strike price, but the spot price of natural gas has risen from below $10 per MMBtu in February to over $12 this month, according to the U.S. Department of Energy's Energy Information Administration. style=""> style="">Morgan Stanley Capital Group is arranger, lender, issuer and collateral agent on the LC, which will fully amortize by March 20, 2010. "They had a fairly well developed financial product that best fit our needs that we were looking to do," says Evans. At the end of March, Dynegy Holdings had $5.9 billion in long-term debt. Current Page:1
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