AES Corp (AES) Prices $500M Senior Notes To Refinance Debts
Zacks Investment Research | Aug 15, 2017 09:52PM ET
The AES Corporation (NYSE:AES) completed the previously announced public offering of $500 million principal amount of 5.125% Senior Notes due 2027. The closing of the offering is expected to be carried out on Aug 28, 2017 subject to terms and conditions.
Details of the Announcement
The pricing of the senior notes will enable AES Corp. to use the net proceeds arising out of the offering to fund the tender offer to purchase the company’s outstanding 8.00% senior notes due 2020.
It also intends to use the remainder of the proceeds from this offering after conclusion, toward retiring other outstanding indebtedness and additionally pay off other fees and expenses.
As per an earlier decision, the company previously announced its intention to initiate a tender offer to purchase for cash, up to $217 million of its outstanding 8.00% senior notes due 2020, subject to certain terms, scheduled to expire on Sep 11, 2017.
Factors In Favor
AES Corp. is focused on preserving its financial flexibility by reducing costs. As further step toward this end, the company launched $400 million in cost reduction and revenue enhancement initiatives including overhead reductions, procurement efficiencies and operational improvements. Such initiatives will aid the company achieve its annual savings target by 2020. Moving forward, the company targets additional cost savings through reducing operation and maintenance costs by $100 million through 2018.
Talking about cost reduction initiatives, one of the peers in the same industry, Duke Energy Corporation (NYSE:DUK) , also recently entered into an agreement with Siemens to design and build a new advanced gas combustion turbine to help lower customer costs, promote regional economic growth, increase efficiency and flexibility in operations.
Price Movement
Shares of AES Corp. have underperformed 0.8% in the last 12 months compared with the Original post
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