The natural gas utility Southern Union Co. (SUG: 22.50 0.00 0.00%) said its affiliate, Florida Gas Transmission Company LLC (“FGT”), issued $850 million in senior notes. The offerings are in two series and are in accordance with Rule 144A and Regulation S guidelines. The notes have been rated “Baa2″ by Moody’s Investors Service Inc. and “BBB” by Standard & Poor’s Rating Services.
One offering comprises $500 million of 5.45% senior notes due July 15, 2020, at an offer price of $99.826 (per $100.00 principal) to yield 5.47%, while the second offering constitutes $350 million of 4.00% senior notes due July 15, 2015, at an offer price of $99.982 (per $100.00 principal) to yield 4.00%. The net proceeds of the total offering will be $843.9 million.
The Florida Gas Company will use the proceeds to partially fund its $2.4 billion Phase VIII expansion project and for general corporate purposes. The Southern Union affiliate also decided to redeem its $325 million of 7.625% notes due Dec 1, 2010, on Aug 19, 2010. The company might use the proceeds to redeem its debts.
Southern Union ended the first quarter with a total debt of $3.47 billion compared with $3.56 billion in the first quarter of 2009. Southern repaid $100 million of 6.089% Senior Notes in February 2010 and the $40.5 million of 8.25% Senior Notes in April 2010 primarily using its credit facilities.
During the first quarter earnings call, Southern Union reaffirmed its earnings guidance for 2010 of $1.92 to $2.12 per share, on a GAAP basis, and adjusted net earnings of $1.75 to $1.95 per share. The Zacks Consensus Estimates for second-quarter 2010, fiscal year 2010 and fiscal year 2011 are 38 cents per share, $1.85 per share and $2.13 per share, respectively.
Florida Gas Transmission is an affiliate of Southern Union and El Paso Corp. (EP: 12.29 0.00 0.00%). The company operates a 5,000-mile pipeline system, which can deliver 2.3 billion cubic feet (bcf)/day of natural gas to consumers in the Florida peninsula.
| Analysts' Targets | |
| RBC Capital Markets | $26 |
| Sector Perform | |
| Monday, May 10, 2010 | |
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