Sept. 15 (Bloomberg) -- Baker Hughes Inc., the world’s third-largest oilfield services provider, said it obtained a $2.5 billion revolving line of credit that more than doubles its borrowing capacity
The five-year financing, which will be used for general corporate purposes, replaced a $1.2 billion facility that was to expire in March, the Houston-based company said today in a regulatory filing. JPMorgan Chase & Co. was the administrative agent on the transaction.
The interest rate on borrowings under the new credit will range from 0.625 percentage point to 1.125 percentage points more than the London interbank offered rate, depending on the company’s debt rating.
Moody’s Investors Service rates Baker Hughes’s senior unsecured debt A2, while Standard & Poor’s gives it an A, which means that any borrowings would cost the company 0.875 percentage point more than Libor, according to the filing.
The previous loan, if drawn down, would have paid a rate equal to Baker Hughes’s three-year credit default swap mid-rate spread. The company’s three-year credit-default swap reached a recent high of 104 basis points on June 11, 2010, three months after the deal was closed, according to data provider CMA. That spread is currently 42 basis points.
The company reported net income in the second quarter of $388 million, or 77 cents a diluted share, compared with $93 million, or 23 cents, a year earlier, according to a regulatory filing on Aug. 2.
Baker Hughes had $3.5 billion of long-term debt as of June 30, according to the filing, and $937 million of cash and cash equivalents, down from $1.4 billion a year earlier.
Schlumberger Ltd. and Halliburton Co. are the world’s largest oilfield services providers.
--Editors: Faris Khan, Chapin Wright
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