Fri Oct 31, 2008 7:49pm EDT
*Critical credit line will be delayed, reduced in size
*Exploring options to raise additional $750 million
LOS ANGELES, Oct 31 (Reuters) - Constellation Energy Group Inc (CEG.N: Quote, Profile, Research, Stock Buzz) said a credit line critical to shoring up its liquidity will be delayed and cut in size, leading it to explore options to secure the full $2 billion it had originally sought.
The power company said it expected to receive bank commitments of about $1 billion to $1.25 billion rather than the previously announced $2 billion. Constellation signed an amended commitment letter with UBS Loan Finance LLC and RBS Securities Corp, and the facility is expected to close no later than Nov. 26. It had been expected to close on Friday.
A Constellation spokesman would not comment on the reasons for either the delay or the reduction of the facility's size.
In a statement, Constellation said it still expected to raise a total of $2 billion and is exploring alternatives for securing $750 million in additional liquidity with MidAmerican Energy Holdings Co and other parties.
Last month, Constellation agreed to be bought by MidAmerican, a unit of Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz), for $4.7 billion. Fears that the company could face liquidity problems had knocked more than 50 percent off its stock price, and MidAmerican at the time also provided an immediate $1 billion cash infusion through the purchase of Constellation preferred equity.
On Friday, Constellation said it was still working to reduce capital spending and other business costs.
"Despite the very challenging credit environment, we are making significant progress toward meeting our liquidity needs," Constellation Chief Executive Mayo Shattuck said in a statement.
"The combination of the $1 billion investment by MidAmerican, the expected size of the credit facility, and the progress toward and expected impact of achieving our strategic initiatives provides sufficient liquidity to manage our business and successfully close the merger."
Constellation shares fell 13 cents, or 0.5 percent, to close at $24.21 on Friday. The shares did not trade following the announcement, which came after the market closed. (Reporting by Nichola Groom, editing by Richard Chang)
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