NiSource (NI) Prices Maximum Tender Offer, To Cut Capital Cost
NiSource Inc. NI announced the pricing terms of its previously announced cash tender offer of up to maximum $150 million. The series of notes earmarked for the tender offer will help the company lower its capital servicing costs.
The utility will accept tender offer for purchase from 6.25% notes due 2040 followed by 5.95% notes due 2041, 5.80% notes due 2042, 5.65% notes due 2045 and lastly, 5.25% notes due 2043.
NiSource intends to fund the purchase of the accepted notes on offer with a portion of net proceeds from the sale of low interest bearing long-term debt securities in a public offering.
Refinancing of Debts
The company is fully utilizing the near-zero interest rates and issuing new debts with low interest rates. Further, it is utilizing the proceeds to partly repay the existing high-interest bearing old debts.
For this purpose, NiSource announced the pricing of $2-billion senior notes in two tranches on Aug 12. The company priced 0.950% senior notes of an aggregate principal amount worth $1.25 billion due 2025 and 1.700% senior notes worth $0.75 billion aggregate principal amount due 2031.
Interest expenses of the company at the end of first-half 2020 were $189.9 million compared with $189.7 million in the year-ago period. With the repurchase of high-interest bearing debts, interest expenses are expected to decline over the long term.
Current Debt Position
As of Jun 30, 2020, NiSource’s long-term debt amounted to $8,810.2 million, up from $7,856.2 million as of Dec 31, 2019. Also, the company does not have any significant long-term debt maturity until 2021.
Peer Moves
Other companies from the same sector are also capitalizing on this opportunity of near-zero interest rates to issue debt at cheaper rates and repay or refinance debt obligations and lower the debt servicing costs. Recently, Clearway Energy, Inc. CWEN, Bloom Energy Corporation BE and Linde plc LIN among others opted for refinancing debts.
Zacks Rank & Price Performance
Currently, the stock carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past three months, shares of the company have declined 6.9% compared with the industry’s fall of 5.6%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NiSource, Inc (NI) : Free Stock Analysis Report
Linde plc (LIN) : Free Stock Analysis Report
Clearway Energy, Inc. (CWEN) : Free Stock Analysis Report
Bloom Energy Corporation (BE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
