Bloomberg News

Kinder Morgan Said to Begin Marketing $13.3 Billion of Loans

November 15, 2011

(Adds bridge loan pricing in sixth paragraph.)

Nov. 14 (Bloomberg) -- Kinder Morgan Inc. has begun marketing $13.3 billion of loans backing its purchase of El Paso Corp., according to a person with knowledge of the matter.

The sale comes after Barclays Plc, the bank arranging the financing for the natural-gas pipeline company, got 10 banks to agree to hold portions of the debt, said the person, who declined to be identified because the deal’s private.

Barclays arranged for Bank of America Corp, Bank of Tokyo Mitsubishi UFJ, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank, JPMorgan Chase & Co., Royal Bank of Canada, Royal Bank of Scotland Group Plc, UBS AG and Wells Fargo & Co. to sign on to a $6.8 billion bridge loan, a $5 billion term facility and portions of a $1.5 billion revolving line of credit, according to a Nov. 10 regulatory filing.

The banks are each holding about $620 million portions of the 364-day bridge piece and about $450 million slices of the three-year term loan, the person said.

Interest on the bridge loan is tied to ratings and ranges from 2.5 percentage points more than the London interbank offered rate to 4.5 percentage points more than the lending benchmark, the person said. The term piece pays 3.5 percentage points more than Libor.

The bridge loan pays interest of three percentage points more than Libor based on Kinder Morgan’s current ratings, the company said in the filing. Standard & Poor’s grades Kinder Morgan Energy Partners LP’s BBB, while Moody’s Investors Service gives it a Baa2 mark.

Bridge financings are usually repaid by the borrower selling bonds.

Emily Mir, a spokeswoman for Kinder Morgan, declined to comment.

Kinder Morgan, based in Houston, agreed to buy El Paso on Oct. 16 for $21.1 billion to create the largest natural-gas pipeline in the U.S.

--Editors: Faris Khan, John Parry

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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