TECO Energy Inc.’s (TE) subsidiary, Tampa Electric Company, altered the conditions of the recently announced debt swap offer. The company will now issue 5.40% notes due on 2021 in place of 5.10% notes due in 2021 and swap it with its outstanding $250 million of 6.875% senior notes due in 2012 and $400 million of 6.375% senior notes due in 2012.
The validity of the exchange offer is now extended to December 14, 2010, from the previously announced closure date of December 8, 2010. Tampa Electric has also extended the early participation date to December 7, 2010, from the previous date of November 30, 2010. Existing holders of the notes, who tender their notes on or before the early participation date, will be eligible for an additional early exchange premium.
The exchange offer is subject to certain conditions placed by the company. A condition from the previous swap announcement is that the company will not receive any cash proceeds from this exchange offer and notes will only be distributed to holders of Existing Notes who complete and return a letter of eligibility. Tampa Electric has set one more criterion — it needs to receive valid tenders of at least $250 million aggregate principal amount of old notes on or prior to the early participation date.
Interest charges of TECO Energy during the third quarter 2010 increased marginally to $57.4 million from $57.3 million in the year-ago quarter owing to higher long-term debt levels. Although the company has increased the interest rate of the notes by 30 basis points we expect the swapping of debts would bring down the interest expense, going forward, as new lower interest bearing debts will be issued against higher interest bearing debts.
The adjusted earnings of TECO Energy at the end of third-quarter 2010 were 34 cents per share compared with 40 cents per share in the year-ago comparable period. The Zacks Consensus Estimates for fourth quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are 23 cents per share, $1.32 per share and $1.41 per share, respectively.
TECO Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-tern Neutral rating on the stock. TECO Energy competes head-to-head with NextEra Energy Inc. (NEE), Progress Energy Inc. (PGN) and Southern Company (SO).
Tampa Electric Company is a regulated, wholly owned subsidiary of TECO Energy and runs both electric and gas operations.
Based in Tampa, Florida, TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electric energy in Florida.
NEXTERA ENERGY (NEE): Free Stock Analysis Report
PROGRESS ENERGY (PGN): Free Stock Analysis Report
SOUTHN COMPANY (SO): Free Stock Analysis Report
TECO ENERGY (TE): Free Stock Analysis Report
Zacks Investment Research
