Diversified energy company NiSource Inc. (NI), through its financial subsidiary NiSource Finance Corp., is planning to sell about $250 million of long-term debt securities in a public offering to fund the buyback of another debt.
The debt offering will bear a coupon of 6.25% per year with a maturity date of December 15, 2040. The notes issued will be fully and unconditionally guaranteed by NiSource.
Separately, NiSource Finance Corp. launched a cash tender offer to buy back nearly $250 million of 10.75% notes due 2016 and 6.80% notes due 2019. The company currently has $600 million worth of 2016 notes and $500 million of 2019 notes outstanding. This buyback offer expires on December 29, 2010.
NiSource’s financial position at the end of the recent quarter was solid with ample liquidity. At quarter-end the company had $892.9 million available under its credit facility with cash in hand of roughly $10.9 million. However, NiSource’s debt-to-capitalization ratio worsened at 60% at the end of the third quarter compared to 58% as of second quarter 2010.
NiSource has made significant progress in its liquidity and financing needs. Additionally, investment-grade credit ratings from the likes of Standard & Poor’s (BBB-), Moody’s (Baa3), and Fitch Ratings (BBB-) are providing NiSource with additional financial flexibility. These agencies affirmed their investment ratings with a stable outlook for NiSource.
NiSource posted adjusted earnings of 4 cents per share in the third quarter of 2010, compared to 7 cents in the year-ago period. NiSource expects adjusted earnings per share to be in the range of $1.20 to $1.25 for 2010. Furthermore, the company reiterated its long term earnings growth target of 3% to 5%.
The Zacks Consensus earnings estimates for fourth quarter 2010, fiscal 2010 and fiscal 2011 currently stand at 34 cents, $1.22 and $1.32, respectively.
Based in Merrillville, Indiana, NiSource through its subsidiaries operates natural gas as well as electric storage and distribution businesses. NiSource is one of the nation’s largest natural gas distribution companies measured by the number of customers. The company’s major peers include Dominion Resources Inc. (D) and Duke Energy Corporation (DUK).
NiSource currently retains a Zacks #3 Rank (short-term Hold rating). We also have a long-term Neutral rating on the stock.
DOMINION RES VA (D): Free Stock Analysis Report
DUKE ENERGY CP (DUK): Free Stock Analysis Report
NISOURCE INC (NI): Free Stock Analysis Report
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