El Paso Corp. and Global Infrastructure Partners (GIP) on Wednesday announced they have closed the project financing for the Ruby Pipeline project.
The seven-year, $1.5 billion debt facility is supported by a group of domestic and international banks. Ruby's borrowing rate is LIBOR plus 300 basis points for the first two years; LIBOR plus 325 basis points for the third and fourth years; and LIBOR plus 375 basis points for the fifth, sixth and seventh years, assuming that $700 million of debt is refinanced by the end of the fourth year.
Ruby intends to enter into forward swap agreements to fix at least 75 percent of the floating LIBOR interest rate, beginning in June 2011 and extending through the maturity of the bank facility. Assuming the current six-month LIBOR rate, the expected weighted average rate for the financing is expected to be less than 7 percent, excluding debt issuance costs.
"The closing of the Ruby Financing project represents the delivery of the most significant component of our 2010 financing plan," said Doug Foshee, chairman, president, and chief executive officer of El Paso Corporation. "With the sale of our Mexican pipeline assets and the recent drop down to El Paso Pipeline Partners, L.P., we have effectively addressed our funding requirements for 2010."
Ruby will not draw under the new facility until it has received final regulatory approvals and other conditions precedent under the financing agreements. The debt will be supported by the equity of Ruby and an El Paso Corp. construction completion guarantee.