A 15-bank consortium led by Citibank, Morgan Guaranty Trust Co., and Toronto-Dominion Bank has closed an $814 million bank credit facility to Niagara Mohawk Power Corp.
The facility provides working capital and financial flexibility as Niagara Mohawk seeks approval of a plan to create a competitive electricity market in New York, freeze average electricity prices for five years, and restructure in an attempt to maximize the value of the company's existing businesses and pursue growth opportunities, said William E. Davis, chairman and chief executive officer of Niagara Mohawk.
The bank agreement will be in place through June 1999 and will allow the company to borrow up to $125 million under a revolving credit facility and up to an additional $255 million on a term-loan basis.
The agreement also provides $434 million in letters of credit, which guarantee Niagara Mohawk's performance under certain pollution control bonds issued by the New York State Energy Research and Development Authority.
The credit facility is secured by $814 million of Niagara Mohawk first mortgage bonds. The transaction was approved by the New York Public Service Commission on March 14.
Niagara Mohawk has 1.5 million electric and 500,000 natural gas customers across a 24,000-square-mile service area in upstate New York.