CFC Leads $390 Million Syndication for Texas-Based G&T

CFC and South Texas Electric Cooperative (STEC) recently closed an amend and restate (A&R) transaction for a $390 million, five-year unsecured revolving credit facility. Through the A&R, the Nursery, Texas-based generation and transmission (G&T) cooperative was able to extend the maturity date of the facility from February 2023 to November 2026 while maintaining the existing pricing grid and also upsizing the facility by $140 million. The cooperative will use the facility to support general operations and capital expenditures.

CFC arranged STEC’s facility in 2011 and has served as administrative agent since then. CFC has also arranged three amendment transactions for the facility since 2011.

“Although STEC’s assets performed very well during Winter Storm Uri, the increased fuel and energy prices as well as increased ERCOT collateralization showed us that increased liquidity would be beneficial,” STEC CFO Jane Krause said. “While market reform is underway, STEC felt that this was the right time to pursue the increase in the syndication.”

Two new lenders in addition to CFC and three of the four other existing lenders participated in the transaction. It was well received with a 1.6x oversubscription ratio enabling STEC to increase the size of the facility to $390 million.

Facility to Support STEC Transmission Projects

“In addition to increased liquidity, STEC is poised to substantially increase its transmission assets in the coming years, so a large part will be used to fund those projects before long-term financing is put in place,” Krause said. “The CFC team was invaluable in the preparation and execution of the amendment. Their relationship with the banking market proved valuable in bringing two new banks into the syndication. It was very reassuring and advantageous to work with a team with so much experience in the market and their efforts made the transaction very easy.”

Since 2005, CFC has completed more than $27 billion of transactions in the syndicated loan market.

STEC is the 39th-largest U.S. G&T cooperative and provides wholesale electricity to nine distribution systems in southern Texas. Its members supply electricity to more than 290,000 homes, farms, businesses and industries.