Fortis, Foothills and High Sierra Successfully Close $130 Million Syndication and Long-Term, Fixed Price Gas Hedge for Monroe Gas Storage Company, LLC
Posted on: Monday, 14 July 2008, 09:01 CDT
DALLAS, July 14 /PRNewswire-FirstCall/ -- Fortis Merchant Banking announced it successfully closed syndication of a $130 million senior secured financing for Monroe Gas Storage Company, LLC, a joint venture formed to construct, own and operate a depleted reservoir gas storage facility owned by Foothills Energy Ventures, LLC and High Sierra Energy, LP. Fortis Merchant Banking structured and underwrote the senior secured financing, which is comprised of the following tranches:
-- Construction loan of $90 million that will convert into a 5-year term loan at the commercial operation date,
-- Pad gas lease facility of approximately $40 million to finance the acquisition of base gas; the pad gas lease facility has a tenor of approximately 8 years.
"This is another great example of Fortis' commitment to the midstream energy space," said Casey Lowary, Director of Energy, Oil & Gas Group at Fortis. "As one of the leading merchant banks dedicated to the North American midstream energy market, we are excited to finance this important natural gas infrastructure project."
In addition, the pad gas lease facility is accompanied by a long-term, fixed price gas hedge provided by Fortis Energy Marketing and Trading (FEMT) designed to eliminate commodity price risk from the lease equation for the lessors and the lenders.
Fortis is the sole bookrunner, lead arranger and administrative agent, and the syndication was oversubscribed.
"We are very pleased with this outcome, particularly in light of recent market conditions," said John Sullivan, Head of Loan Syndications at Fortis. "Foothills and High Sierra are to be commended for organizing a highly professional effort and for their close collaboration with our loan market investors."
"The successful execution of the commodity price hedge and asset management strategy through the Pad Gas lease structure, developed by our Oil and Gas team in consultation FEMT, provides an important element of risk mitigation for Monroe. Fortis is keen to further leverage the complimentary capabilities of Fortis Energy-Oil & Gas and FEMT to achieve similar outcomes for other Fortis clients," said Darrell Holley, Managing Director and Global Head of Oil and Gas at Fortis.
The Monroe Gas Storage facility, currently under preparation for construction, is a depleted reservoir gas storage facility located in Monroe County, Mississippi. The facility has a working gas capacity of 10.1 Bcf and a pad gas capacity of 3.5 Bcf. The facility is ideally located with dual interconnects to two major pipelines; the Texas Eastern Transmission Company (TETCO) and the Tennessee Gas Pipeline (TGP).
"We are very excited to have our financing closed and to begin construction," said Brian Bierbach, President and CEO of Foothills Energy Ventures, LLC. "We fully anticipate being commercially operational beginning next April. The team at Fortis Merchant Banking did an excellent job, and we would like to thank them for all their hard work," commented Bierbach.
About Fortis Merchant Banking
Fortis Merchant Banking provides high-value tailor-made services to medium-sized companies, large corporations and institutional investors. As a worldwide organization, we have developed special expertise in cash & treasury management, debt, equity and structured finance, trading & financial risk hedging, financial advisory and structuring. We serve commodity producers, traders and distributors all over the world. We are a world leader in fund administration, global custody, securities lending and clearing services. Thanks to an integrated network, the Business combines the strength of an international group with local expertise and proximity. Dedicated Relationship Managers coordinate all banking facilities and can call on specialists in all fields.
About Fortis
Fortis (Euronext Amsterdam: FORA / Brussels: FORB) is a global financial services provider engaged in banking and insurance. We offer our personal, business and institutional customers a comprehensive package of products and services through our own channels, in collaboration with intermediaries and through other distribution partners. As of June 30, 2008, Fortis has a market capitalization of EUR 23.9 billion (USD 37.7 billion). Together with ABN AMRO, we have a presence in over 50 countries and a dedicated, professional workforce of more than 85,000. More information is available at http://www.fortis.com/.
Fortis Merchant Banking
CONTACT: Amy Rosenberg, +1-212-850-5615, for Fortis
Web site: http://www.fortis.com/
Source: PRNewswire-FirstCall
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