American Water Works Company, Inc. (AWK) has solidified its existing liquidity position. The company has raised the commitments under its revolving credit facility and increased its commercial paper program. American Water Works has received approvals from its subsidiary, American Water Capital Corp., and its lenders.
Per the plan, American Water Works’ commitments under the revolving credit facility and commercial paper program will be increasing to $1.25 billion from $1 billion and to $1 billion from $700 million, respectively. Under the revolving credit facility, the termination date for $1 billion has been extended to Oct 2018 from the original date of Oct 2017. Other terms and conditions of the revolving credit facility will remain unchanged.
American Water Works intends to utilize the increase in commitments under its revolving credit facility and enhance its commercial paper program for general corporate purposes.
In Oct 2012, American Water Works entered into a new revolving credit agreement worth $1 billion in aggregate total commitments, while replacing the existing revolving credit facility of $685 million. The company increased the funding limit for general corporate financing activities.
American Water Works is currently following steady inorganic growth strategy to expand its footprint, while improving the existing operations. In 2013, the company has already completed several acquisitions and invested substantial amounts for its internal projects.
Recently, American Water Works’ subsidiary Missouri American Water acquired Tri-States Utility, Inc. On the organic growth front, the company’s another unit Pennsylvania American Water announced to invest $0.6 million for water main replacement in the Borough of Bridgeport.
In May 2013, the credit rating companies - Moody's Investors Service and Standard & Poor's - upgraded their corporate credit rating on American Water to ‘Baa1’ from ‘Baa2’, and to 'A-' from 'BBB+', respectively. ‘Baa1’ considers a medium grade and it possess certain speculative characteristics, while ‘A-‘ implies strong ability to meet financial commitments. A strong credit rating will help American Water Works to accumulate funds from the lenders with lower interest rate.
We believe that American Water Works’ continuous effort towards addition of new assets and improvement of the existing operations, backed by funding support from the financial institutions, will enable the company to provide uninterrupted utility services to its customers while strengthening system capability.
American Water Works currently has a Zacks Rank # 3 (Hold). However, other water utilities that are worth considering include Connecticut Water Service Inc. (CTWS) with a Zacks Rank #1 (Strong Buy), and Consolidated Water Co. Ltd. (CWCO) and SJW Corp. (SJW), each with a Zacks Rank #2 (Buy).
Voorhees, N.J.-based American Water Works was founded in 1886. The company serves around 14 million people with water and water-related services.
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