Black Hills (BKH) Prices $700M Notes To Refinance Debts
Zacks Investment Research | Oct 01, 2019 09:28PM ET
Black Hills Corporation (NYSE:BKH) announced that it has priced a public offering of $700 million senior unsecured notes. The debt offering is in two tranches, with first issue comprising $400 million of 3.050% senior notes due 2029 and second issue consisting of $300 million of 3.875% senior notes due 2049. The offering will close on Oct 3 2019, which is liable to customary closing conditions.
The company intends to utilize the net proceeds from the offering to redeem all of its outstanding $400 million term loan, retire all $200 million of 5.875% senior unsecured notes due Jul 15, 2020 and utilize the balance to reimburse a portion of its surplus commercial paper and general-corporate basis.
The decision to refinance debt will enable the company to benefit from borrowed capital for a longer period at a lower cost. The capital-intensive utilities have started to gain from the Fed’s back-to-back rate cut and have started to refinance their high interest debt from the issue of low interest bearing notes.
Many companies from the capital-intensive industry are reducing cost of capital post the rate cut through debt refinancing. WPX Energy (NYSE:WPX) , Plains All American Pipeline (NYSE:PAA) and Noble Energy (NYSE:NBL) are such companies.
Debts
Black Hills Corporation’s debt-to-capitalization ratio currently stands at 57.7%, higher than the Zacks Investment Research
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