Westar Energy Subsidiary Issues FMB
Repeat issuer...
June 10, 2009
Kansas Gas & Electric (KGE), a subsidiary of Wichita-based Westar Energy Inc., tapped the private placement market with a $300 million first mortgage bond deal this week, according to reports. The company is a repeat issuer in the private market.
The deal, sold under rule 144A, consists of a single tranche of 10-year, 6.7% notes, and is rated ‘BBB+’ by Fitch Ratings. Bank of New York Mellon, Citigroup, and Credit Suisse were joint-leads on the transaction.
According to a report by Fitch, the bonds will rank equally with KGE’s existing $712.4 million of existing secured debt, and the notes will be used to repay indebtedness under the utility’s revolving credit facility, and for general corporate purposes.
KGE last tapped the private placement market just over a year ago, in May 2008. That deal consisted of senior notes in 15- and 30-year bullets priced at 245 basis points and 220 basis points over Treasurys, respectively. Barclays Capital and BNP Paribas served as joint-lead agents on the deal, which was rated ‘Baa2/BBB-’.
Going back to October 2007, KGE also tapped the private placement market with a $175 million sale of first mortgage notes. The 30-year deal priced with a 6.53% coupon.
Westar Energy [NYSE:WR] has a market cap of $1.91 billion and is the largest electric utility in Kansas, engaged in electricity generation, transmission, and distribution to approximately 679,000 customers in the central and northeastern parts of the state, while KGE serves the south central and southeastern parts of the state.
For the first quarter of 2009, Westar reported $44.16 million in net income on $421.77 million in total revenue, versus $61.14 million in net income on $406.83 million in total revenue for the year-prior period.
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