FS Energy and Power Fund (FSEP) raised more than $1 billion in debt financing, including $500 million in 7.5% senior secured notes due 2023 and a $195 million term loan facility and $390 million revolving credit facility, both priced at LIBOR plus 275 basis points with a maturity date of February 2023.
JPMorgan Chase, SG Americas Securities and BMO Capital Markets served as joint lead arrangers and joint bookrunners on the facilities. The term loan and revolver replace existing credit facilities and will reduce the weighted cost of capital, creating additional opportunities to expand the portfolio.
Both the term loan and revolver can be increased to more than $850 million through an accordion feature. As such, the anticipated blended yield for all new financings is expected to be approximately LIBOR plus 395 basis points.
The new funding will simplify the company’s capital structure, diversify its funding sources, enhance its matching of asset and liability duration and allow for greater investment flexibility.
“Optimizing FSEP’s liability profile has been a key strategic focus since announcing our partnership with EIG,” said Michael Forman, chairman and CEO of FS Investments. “By constructing a more efficient and longer-term capital structure, we have taken an important step in driving value for our investors.”
FSEP was advised by FS/EIG Advisor, a partnership between FS Investments and EIG Global Energy Partners.
FS Energy and Power Fund is a business development company sponsored by FS Investments which focuses primarily on investing in the debt and income-oriented equity securities of privately held U.S. companies in the energy and power industry.