Macquarie Infrastructure Company (NYSE: MIC) announced that it has successfully refinanced the debt of its Hawaii-based gas processing and distribution business. The Gas Company used the proceeds to refinance all of its debt and to put in place a facility that will fund future growth initiatives.
The Gas Company issued $100.0 million of 10-year, non-amortizing senior secured notes. The notes bear interest at a fixed rate of 4.22%.
The business also obtained an $80.0 million, 5-year, non-amortizing term loan. The interest rate floats at LIBOR + 225 basis points. The floating rate has been fixed for 4 years at an all-in rate of 2.89% using an interest rate hedge (swap).
The proceeds of the senior secured notes and the term loan were used to completely repay $180.0 million of debt comprising two existing 5-year term loans and a revolving credit facility. Those facilities would have matured in June of 2013.The weighted average cost of debt borne by The Gas Company has been reduced from 4.9% to 3.6%. The lower rates will reduce its cash interest expense by approximately $2.3 million per year or approximately $0.05 per share per year, pre-tax. “The terms of the new debt facilities and the fact that the offerings were over-subscribed reflect the strong financial performance of The Gas Company to date as well as its prospects,” said James Hooke, Chief Executive Officer of MIC. “The overall increase in the amount of credit available, when approved, is expected to facilitate the further growth of the business including the potential expansion into LNG distribution.” The Gas Company also obtained commitments to fund an additional $60.0 million in a 5-year revolving credit facility that is expected to be available to fund growth capital expenditures and general corporate needs. That facility is expected to become effective following approval by the Hawaii Public Utilities Commission. Once approved, drawings on the facility will bear interest at LIBOR + 150 basis points.
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