FS Energy and Power Fund (FSEP) announced it has raised over $1 billion of debt financing that simplifies its capital structure, diversifies its funding sources, enhances its matching of asset and liability duration, and ultimately allows for greater investment flexibility.  The financings include $500 million of 7.500% senior secured notes due 2023, and a $195 million term loan facility and $390 million revolving credit facility priced at LIBOR + 275 basis points that mature in February 2023.  Both the term loan and revolving credit facilities can be increased to more than $850 million through an accordion feature.  As such, the anticipated blended yield for all these new financings is expected to be approximately LIBOR +395 basis points.  FSEP is advised by FS/EIG Advisor, LLC, a partnership between FS Investments and EIG Global Energy Partners (EIG).

"Optimizing FSEP's liability profile has been a key strategic focus since announcing our partnership with EIG," said Michael Forman, Chairman and CEO of FS Investments.  "By constructing a more efficient and longer-term capital structure, we have taken an important step in driving value for our investors."

The term loan facility and revolving credit facility replace existing credit facilities.  This will reduce the weighted cost of capital and create additional opportunities to expand the portfolio.  JPMorgan Chase Bank N.A., SG Americas Securities, LLC, and BMO Capital Markets are the joint lead arrangers and joint bookrunners for the new credit facilities.

"This combined capital structure provides us with capacity and flexibility to continue repositioning the existing portfolio to emphasize our privately originated investments that feature significant downside protection," said Bill Sonneborn, President of EIG Global Energy Partners.  "The incremental capital will help us accelerate the portfolio diversification of FSEP while maintaining prudent leverage levels."

Dechert LLP advised FS Energy and Power Fund on the deal.

The Dechert finance team included partners Jay Alicandri and Jeff Norton, and associates Ben Leese and Cesar Sanchez. The Dechert securities team included partners James Lebovitz and Eric Siegel, and associates Stephen Pratt, Ross MacConnell and Francesco Salpietro.