Daily News: August 13, 2012

Wells Fargo Arranges Refinancing for Macquarie’s The Gas Company


Macquarie Infrastructure Company announced that it has successfully refinanced the debt of its Hawaii-based gas processing and distribution business. The Gas Company used the proceeds to refinance all of its debt and to put in place a facility that will fund future growth initiatives.

The Gas Company issued $100 million of ten-year, non-amortizing senior secured notes. The notes bear interest at a fixed rate of 4.22%.

The business also obtained an $80 million, five-year, non-amortizing term loan. The interest rate floats at LIBOR + 225 basis points. The floating rate has been fixed for 4 years at an all-in rate of 2.89% using an interest rate hedge (swap).

The proceeds of the senior secured notes and the term loan were used to completely repay $180 million of debt comprising two existing five-year term loans and a revolving credit facility. Those facilities would have matured in June of 2013.

The Gas Company also obtained commitments to fund an additional $60 million in a five-year revolving credit facility that is expected to be available to fund growth capital expenditures and general corporate needs. That facility is expected to become effective following approval by the Hawaii Public Utilities Commission. Once approved, drawings on the facility will bear interest at LIBOR + 150 basis points.

Wells Fargo served as the lead arranger on the term loan debt and revolving credit facility. Wells Fargo and Macquarie Capital served as joint bookrunners on the senior secured notes.

The weighted average cost of debt borne by The Gas Company has been reduced from 4.9% to 3.6%. The lower rates will reduce its cash interest expense by approximately $2.3 million per year or approximately $0.05 per share per year, pre-tax.

“The terms of the new debt facilities and the fact that the offerings were over-subscribed reflect the strong financial performance of The Gas Company to date as well as its prospects,” said James Hooke, CEO of MIC. “The overall increase in the amount of credit available, when approved, is expected to facilitate the further growth of the business including the potential expansion into LNG distribution.”

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic, everyday services, to customers in the United States.

The Gas Company, LLC, doing business as HAWAI’IGAS for select products and services, is Hawaii’s only government franchised full-service gas company.