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Linn Energy, LLC Message Board

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  • johns.patrick johns.patrick Jan 12, 2012 12:44 PM Flag

    Info from the Prospectus

    Some questions above as to why they are paying down the revolving line of credit vs more expensive debt.

    A revolving line of credit is a line of credit, meaning you can pay it down and then draw it back up, if you pay off term debt, its paid off and you can't get new term debt without the expense of initiating a new loan. Reality is they decided to increase their "availability" by issuing new units, I'm sure they intend to use this cash for future acquisitons but while they wait to spend the money, they pay down the revolver, it would make no sense to put the cash in the bank and continue to pay interest on the revolver. So while technically it is correct they paid down the revolver, what they are really doing is freeing up availability to acquire additional assets