Bloomberg News

Plains Exploration Said to Meet With Lenders on BP, Shell Loan

September 13, 2012

Plains Exploration & Production Co. (PXP:US), the oil and gas producer acquiring assets from BP Plc and Royal Dutch Shell Plc, will hold a lender meeting today at 1 p.m. to discuss a $1.25 billion term loan B to support the purchase, according to a person with knowledge of the transaction.

The company is proposing to pay interest on the seven-year debt between 3.25 percentage points and 3.5 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.

Plains Exploration may sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

JPMorgan Chase & Co., Bank of America Corp., Bank of Montreal, Barclays Plc, Citigroup Inc., Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank and Wells Fargo & Co. are providing the financing for the Houston-based company, according to data compiled by Bloomberg.

The financing package also includes a $3 billion five-year revolving line of credit, a $750 million five-year term loan A portion and a $2 billion senior unsecured bridge loan, the data show.

Proceeds will be used to refinance certain Plains Exploration debt, finance the cash portions of the acquisitions as well as pay certain fees and expenses associated with the purchases.

Plains Exploration agreed to acquire from BP all of its interests in certain deep-water Gulf of Mexico oil and gas properties for $5.5 billion. Shell sold its stake in a field co- owned with BP for $560 million, according to a Sept. 10 company statement distributed by PR Newswire.

Hance Myers, corporate information officer at Plains Exploration, declined to comment.

Bridge financings usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.

To contact the reporter on this story: Michael Amato in New York at Mamato3@bloomberg.net

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


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