Merrill Lynch & Co. is planning to lead a loan of approximately $2 billion to support the $2.4 billion purchase of England's Yorkshire Energy by American Electric Power Co. and Public Service Company of Colorado.

A joint venture of the two American utilities, called Yorkshire Holdings, hopes to purchase the West Yorkshire-based power supplier by the end of April.

Merrill Lynch was able to use its role as adviser to both American Electric and Public Service Colorado to land its position as the sole underwriter on the marquee utility deal.

Commercial and investment banks have been pushing to provide such complete financing packages in order to win a larger share of acquisition- related revenues. Merrill Lynch clearly led with a historic investment banking strength: its advisory capability.

"This is a good example of Merrill using our brains and brawn to make a difference for our clients," said John F. Yang, the firm's head of syndications.

Merrill Lynch has also already been chosen as a lead manager for an anticipated bond deal, Public Service Colorado officials said. No date has yet been scheduled for that transaction.

Bankers said that few banks other than NationsBank Corp., Chase Manhattan Corp., and BankAmerica Corp., have the capital and the confidence to be the sole underwriter on such a huge loan.

Bankers said that the loans thus far to the consolidating energy sector have been well-received, and predicted that Merrill Lynch would find a similarly receptive audience.

"All the banks that are lenders to both of these guys will be all over this deal like a cheap suit," said a banker familiar with other recent utility loans in the United Kingdom.

Officials at Public Service Company of Colorado said that Merrill played an instrumental role in putting the two U.S. utilities together, and in providing a complete and confident financing package.

"It was very important that Merrill provided the loan," said Mike Pritchard, the assistant treasurer and manager of investor relations for the Denver-based utility.

Mr. Pritchard said that while the deal would have been possible had the companies needed to put the financing out for bid, the timing and the confidentiality made the Merrill loan package cleaner and quicker.

"The timing was important because we don't know how many other deals are brewing in the United Kingdom," said Mr. Pritchard. "We just didn't have the luxury of exhausting the traditional requests for proposals and so forth."

Mr. Pritchard said that the company negotiated rigorously and aggressively about the pricing. "If there wasn't room for give and take by both parties, we would have lost some time, but we would have gone elsewhere," he said.

The loan, which is structured as a five-year revolving credit facility, does not provide the lenders with recourse to either parent company.

As such, lenders should sign onto the deal in order to establish a relationship with Yorkshire Holdings, said Mr. Pritchard.

"A bank's relationship with Yorkshire is not guaranteed because they have an existing relationship with Public Service Colorado," said Mr. Pritchard.

Yorkshire Holdings is expected to have investment grade ratings. The loan is likely to be priced at slightly more than 75 basis points over the London interbank offered rate.

Time pressure to get regulatory approval for this deal before the British elections might increase the pricing.

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