Duke Energy (NYSE: DUK) and Progress Energy (NYSE: PGN) secured new lines of credit, some of them from Chinese lenders, ahead of the expected completion of Duke’s acquisition of Progress for $13.7 billion in stocks.
The Wall Street Journal reports that the companies arranged $6 billion in financing, in which Duke has access to $4 billion and Progress has access to $2 billion. The amounts will be combined once the merger is completed. Ten banks agreed to provide $305.5 million each in credit, including the Chinese government-owned Bank of China Ltd. and Industrial & Commercial Bank of China Ltd. China Merchants Bank Co. is among seven banks that each agreed to provide $65 million in credit, the article said. In total, the three Chinese lenders add up to 11 percent of the joint credit facility.
The new lines of credit replace a $3.14 billion line of credit that expires in June 2012 and three credit facilities totaling $2 billion that Progress had that expire in 2012 and 2013, the article said.
Among the other banks that offered $305.5 million each are Wells Fargo & Co., which served as administrative agent, Bank of America Corp. and Royal Bank of Scotland Group PLC, which served as syndication agents for the credit agreement. The other five are units of Barclays PLC, Citigroup Inc., Credit Suisse Group AG, J.P. Morgan Chase & Co. and UBS AG.
A Duke Energy spokesman was quoted as saying in the article that the agreement with the banks was a result of Duke’s partnership with Chinese companies, including ENN Energy Holdings Ltd. and China Huaneng Group, to exchange knowledge on advanced energy and building technologies. In addition, many Chinese banks are looking to expand overseas.
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