Alliant Unit Prices Debt Offering - Analyst Blog
Alliant Energy Corporation
) wholly owned subsidiary Interstate Power and Light Company
("IPL") announced the pricing of its public offering of $250
million 4.7% senior debentures due on Oct 15, 2043.
IPL plans to invest $246.3 million of the net proceeds to reduce outstanding capital under its receivables purchase and sale program, lower long-term debt and for general corporate purposes. Interest expenses of the company at the end of the second quarter were $42.5 million. The new debt issuance will increase interest expenses by $11.6 million per annum.
The current long-term debt-to-capital ratio of the company is 48%, higher than its peer group average of 38.5%. However, its higher debt level is justified on grounds of a higher Return on Equity (ROE) of 11.5% than the peer group average.
The new offering will be made in accordance with the shelf prospectus already filed with the Securities and Exchange Commission.
In Mar 2013, IPL issued 5.1% Series D Cumulative Perpetual Preferred Stock for $200 million. The net proceeds after deducting underwriting discount was $195 million which was used for redemption of its 8.375% Series B Cumulative Preferred Stock while the balance was used for working capital and other general corporate purposes.
Companies need to borrow from the markets to refinance their existing debts. Generally fresh debts are issued at a lower interest rate than the existing ones and have extended maturity periods. This policy gives an opportunity to the companies to utilize the funds in their operations for a longer period.
Alliant Energy Corporation has a Zacks Rank #2 (Buy). Other stocks performing well, with a comparable Zacks Rank of 2 are Brookfield Infrastructure Partners L.P. ( BIP ), Cleco Corporation ( CNL ) and Entergy Corporation ( ETR ).
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