BG launches loan for Origin bid

By Tessa Walsh

LONDON (Reuters) - BG Group launched a syndicated loan of up to $14 billion (7.1 billion pounds) backing its A$13.1 billion hostile bid for Australia's Origin Energy to a wider syndication at a bank meeting in London, banking sources said on Thursday.

The loan, which is BG Group's first full syndicated facility, is catering to tough loan market conditions with a short-term maturity and is aiming for a quick pre-summer syndication to minimise market risk for its arranging banks.

The loan consists of a $9.325 billion term loan A1, a A$2 billion term loan A2 and a $2.8 billion multicurrency revolving credit, the company said, and its availability has been limited until the end of March 2009.

Banking sources had earlier put the size at around $13 billion.

In May, BG Group said it would finance the A$13.1 billion all-cash bid with a mixture of existing cash reserves and a syndicated loan.

The $14 billion loan is supplemented by around 1.95 billion pounds of cash, according to the company, giving a total of $17.85 billion, which may allow the company to increase its bid if it chooses.

Pricing on the loan is linked to a ratings grid, and is currently 60 basis points for a single A rating, a senior banker close to the deal said.

The loan has a tenor of one-year with a one-year extension option to encourage BG Group to refinance quickly in the capital markets and allow banks to re-use scarce capital quickly.