Energy utility NiSource Inc. (NI) announced that it will sell $400 million of its common stock through Credit Suisse Securities under a forward sales agreement.
NiSource intends to utilize the net proceeds from the equity offering for general corporate purposes, which includes funding for its infrastructure investments. Going forward, NiSource aims to spend $1 billion a year on infrastructure investments.
As per the underwriting agreement, the underwriters to the issue were given an option to purchase additional shares of NiSource common stock for a period of 30 days following the offering to cover over-allotments, if any. In the event this over-allotment option is exercised, the number of shares subject to the forward sale agreement will be increased by a corresponding number.
NiSource, before deciding on the mode of financing for its future investment, took into consideration the following three factors: first, to sustain 3% to 5% earnings per share growth; second, maintain the current dividend level of 92 cents; and finally the investment-grade credit rating of the issue. After safeguarding these objectives, the company decided to issue stock to raise additional funds for investment.
The adjusted earnings of NiSource during the second-quarter of 2010 was 13 cents a share compared to 2 cents a share in the year-ago period. Total shareholder equity of the company as of Jun 30, 2010, was $4,894.9 million versus $4,854.1 million as of Dec 31, 2009.
The Zacks Consensus Estimates for third-quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are pegged at 7 cents, $1.22 and $1.29, respectively.
NiSource currently has a Zacks #3 Rank (short-term Hold rating). We also maintain a long-term Neutral rating on the stock.
Based in Merrillville, Indiana, NiSource through its subsidiaries operates natural gas as well as electric storage and distribution businesses.
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