Duke Energy Corp., the energy company that’s buying Progress Energy Inc. to become the largest U.S. utility owner, got a $6 billion credit agreement to support its commercial paper program.
The five-year credit line replaces a $3.14 billion facility that was set to expire June 2012 and three Progress Energy facilities totaling about $2 billion, expiring in 2012 and 2013, the Charlotte, North Carolina-based company said today in a statement distributed by PRNewswire.
Wells Fargo & Co. was administrative agent on the transaction, according to the statement. The Bank of China, the Industrial and Commercial Bank of China, and China Merchants Bank provided $676 million, or 11 percent of the credit. That’s the highest level of participation ever by Chinese banks in a U.S. electric utility’s credit facility, Duke said.
“This credit agreement will be a significant source of our liquidity for many years to come and adds to the financial strength and flexibility of the company’s balance sheet,” Stephen De May, treasurer at Duke, said in the statement.
The interest rate on borrowings under the credit agreement will vary from 90 basis points more than the London interbank offered rate to 147.5 basis points, depending on the credit rating, according to a Nov. 25 regulatory filing. A basis point is 0.01 percentage point.
Under the agreement, Duke has immediate access to $4 billion and $2 billion becomes available following the closing of the Progress Energy acquisition, according to the statement.