Plains All American gets $1.2 billion 364-day loan for acquisitions

By Susanna Moon

Chicago, Dec. 12 - Plains All American Pipeline, LP said it closed a $1.2 billion 364-day credit facility this past Friday for additional liquidity that may be activated at any time over the next six months.

The 364 days will start from the activation date, according to a company press release.

"This liquidity facility enhances our flexibility in accessing the capital markets opportunistically, as we complete the financing for the five acquisitions totaling $2.3 billion announced on Dec. 1," Al Swanson, executive vice president and chief financial officer of Plains All American, said in the release.

"This facility also provides additional liquidity and financial flexibility with which to execute our other growth plans."

DNB Bank is the administrative agent and joint bookrunner. Bank of America and JPMorgan Chase Bank are the co-syndication agents and joint bookrunners. Mizuho Corporate Bank, UBS Loan Finance and Wells Fargo Bank are also lenders.

Acquisition plans

The company said on Dec. 1 that it would maintain a "strong" balance sheet and liquidity position through its five complementary acquisitions, including BP's Canadian natural gas liquids and liquefied petroleum gas business, totaling $2.3 billion.

As previously reported, the company planned to fund these acquisitions in part through its existing credit lines, along with the commitments for the new 364-day liquidity facility.

"These transactions are essentially pre-financed, as we have already substantially pre-funded our equity financing requirements, and we have secured incremental bank funding commitments to ensure PAA maintains substantial liquidity," chief executive officer Greg Armstrong said during the company's conference call to announce the transactions.

The company was targeting between $1 billion and $1.2 billion in commitments for the new 364-day liquidity facility.

Plains All American expected the rates for this facility to be "the same as our existing five-year revolver," Swanson said.

Based on the company's debt rating, pricing on the existing revolver ranged from Libor plus 107.5 basis points to 165 bps, with facility fees ranging from 17.5 bps to 35 bps.

Once the company gained more clarity on the specific timing of the closing of the BP transaction, as well as finalizing its 2012 capital program, Swanson said the company intended to access the debt capital markets to raise longer-term capital.

Through these transactions, Plains All American expected to maintain a "very solid financial position," with liquidity of roughly $2 billion.

The company believed this liquidity position was "adequate," though the composition of what provided this liquidity will change over time, according to Armstrong.

"We've got some hedges locked on the debt market that give us attractive rates, and we just need to get closer to the transaction timing so we don't carry heavy money right now with us as we go forward," Armstrong said at the time.

Plains All American is a Houston-based company focused on the transportation, storage and marketing of crude oil, refined products and other natural gas related petroleum products.

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