February 18, 2016 / 10:55 PM / 4 years ago

KKR launches loan to buy Pemex assets

NEW YORK, Feb 18 (IFR) - Bankers launched a US$1.35bn loan this week to finance KKR’s purchase of Pemex assets at spreads marking a sharp contrast to what the Mexican oil company paid a little over a year ago.

The funding package, which largely comprises term loans, is offering a US$280m five-year tranche at Libor plus 200bp, a US$745m 10-year at plus 250bp and a US$225m 12-year at plus 275bp.

There is also a US$100m five-year revolver paying a spread of Libor plus 200bp.

Such levels are a good 100bp wide to the 85bp Pemex paid on a five-year term loan in December 2014, when US crude was around US$60 a barrel - almost double the US$30 price seen on Thursday.

Proceeds from the senior secured loan, which is expected to close by April, will fund the US private equity shop’s sale-leaseback agreement to invest in 15 separate infrastructure assets.

The assets are 11 pipelines, one set of subsea cables, 2 non-drilling platforms and one gas compression facility.

The transaction is seen as a way to quickly monetize Pemex’s assets and may set a precedent for other private equity firms looking to invest in Mexico following the passage of historic energy reforms in 2014.

BlackRock, First Reserve and Swiss-based private equity firm Partners Group have all announced investments in Mexico’s energy sector.

Under the agreement, Pemex sells the assets to KKR while continuing to operate and maintain them.

The oil company will effectively make lease payments to KKR during the 15-year life of the agreement, after which time it will buy back the assets.

The transaction carries features of straight corporate loans such as Pemex’s guarantee on the leases, as well as project finance features such as a collateral account.

Credit Agricole, the sole bookrunner for the loans, has already held bank meetings in Mexico City and will do the same in New York on February 23. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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