Blackstone Group has hired a bookrunner to launch a debt offering to lever up three hedged thermal generation projects in Texas and pay itself a dividend.
Morgan Stanley is the lead on the $300 million debt package, which will be secured on Blackstone's 1,108 MW Lonestar portfolio in ERCOT.
The deal is made up of a $250 million term loan B and $30 million term loan C, both with seven-year maturities, as well as a $20 million five-year revolver.
The trade was announced to the market on March 22 and a lender meeting was held on March 26. Commitments are due by April 9.
Morgan Stanley has circulated eye-catching initial price talk of 500 basis points over Libor with a 0% index floor and an original issue discount of 98%.
The notes bear a Ba3 rating from Moody’s Investors Service, which noted in its rating report that Blackstone would use $240 million of the proceeds to pay itself an equity distribution.
The collateral package comprises a trio of quasi-merchant fossil fuel-fired plants—Bastrop, Paris and Twin Oaks—which had previously been put up for sale in an auction process run by Citi
). The sale process apparently did not result in a transaction.
The projects had previously been financed in the term loan B market along with the 526 MW Frontera gas-fired combined-cycle project in Hidalgo County.
That loan, however, was paid down with the proceeds of a single-asset refinancing of Frontera last year (PFR, 10/9/18). The Frontera facility began exporting its generation across the border into Mexico in 2016.
Spokespeople at Morgan Stanley in New York did not immediately respond to a request for comment while Blackstone officials declined to comment.