Morgan Stanley buys into BPA’s wires
Following an $18 million deal, Morgan Stanley controls one-third of Bonneville Power Administration’s total northbound transmission capacity (about 1,145 MW) until February 2002. Its share then decreases to about 700 MW until March 2003. The deal was finalized in early January and provides capacity on lines linking California and the Northwest. Morgan Stanley intends to use the capacity to move power purchased in the Southwest for sale to utilities in Washington and Oregon.
Merrill Lynch expects powerful profits
Price volatility has provided opportunity for some. Earnings could jump more than 30 percent for energy-merchant and power generation companies, while those of integrated electric utilities could rise 12 percent for the full year, according to Steven I. Fleishman, head of Merrill Lynch’s global power and gas research group. IPP share prices through late May were up 10 percent while electric utilities were down 1.7 percent, or flat excluding California utilities. Those shares and IPPs outperformed the S&P 500 Index, which was down 5 percent over the same time period.
IOUs are seeing double
The C Three Group reported revenues of the top 78 U.S. IOUs nearly doubled from $347 billion in 1998 to more than $602 billion in 2000. Aggregate net income for the group decreased from $17.3 billion to $17.2 billion. Total assets of these 78 companies now exceed $1 trillion, 26 percent more than in 1998 and 9 percent more than year-end 2000. Nearly all growth in this asset base was outside the core regulated businesses. Deregulation and its associated energy trading and marketing drove most of this growth, but utilities’ diversified business holdings generated an additional $80 plus billion in revenues.
Stocking up on FuelCell Energy
FuelCell Energy Inc. closed its public offering of 3,450,000 shares of its common stock on June 15 at $70 per share for net proceeds to the company of $241.5 million. Merrill Lynch acted as the underwriter for the offering.
Global Power Equipment Group repurchases notes
Global Power Equipment Group Inc. had the agreement of its senior subordinated debt holders to retire the remaining $40 million of its senior subordinated loan due 2010. It has also received a binding commitment from its senior debt lenders, led by Deutsche Bank AG, to expand its senior secured term loan to $95 million, an increase of $35 million. As a result of the retirement, the company expected to realize about $2.8 million in annualized interest expense savings through the end of fiscal 2001.
Peabody Energy slashes debt by $160M
Peabody Energy has reduced total debt by $160 million ($80M senior notes due 2008 and $80M senior subordinated notes due 2008) through a recently completed bond tender offer managed by Lehman Brothers Inc.
Silicon Energy aims to go public
Silicon Energy Corp., a provider of enterprise energy management software, has filed a registration statement with the Securities and Exchange Commission in connection with a proposed initial public offering of common stock. The shares are expected to be offered to the public through an underwriting group managed by Credit Suisse First Boston and co-managed by CIBC World Markets, Lehman Brothers and Stephens Inc.
NxtPhase completes $25M private financing
With CIBC World Markets acting as its agent, NxtPhase Corp. welcomed five new investors: GE Equity, Perseus 2000 LLC, Wexford Capital LLC, Mitsubishi Corp. and Reliant Energy Ventures. Each of the existing NxtPhase investors also participated through purchasing additional shares and/or conversion of loans made in earlier financings: Canadian Science and Technology Growth Fund Inc., GrowthWorks Capital (Working Opportunity Fund), Hydro-Quebec Capitech Inc., and Western Technology Seed Investment Fund Limited Partnership. NxtPhase has set aside an additional equity of $5M, which will close over the next three months, to allow both equity and product purchase participation by a number of integrated power utilities-the first disclosed was Reliant. Several U.S. and one Canadian utility were being considered at press time.
Edison International tries to stave off bankruptcy
Edison International’s wholly-owned Mission Energy Holding Co. planned to conduct a $1.2 billion sale of seven-year senior secured notes through Goldman Sachs & Co. to help Edison shed debt maturing this year. Edison’s Southern California Edison (SoCal Edison) utility unit is also trying to avoid bankruptcy. SoCal Edison has defaulted on $400 million of notes, $531 million of commercial paper and owes power generators a whopping $1.3 billion. Standard & Poor’s maintain the prospects of a bankruptcy filing for SoCal Edison remain high.