Aqua America, Inc. (NYSE:WTR) announced today that the company’s largest
subsidiary, Aqua Pennsylvania Inc., (Aqua) closed an agreement to issue
$75 million in tax-exempt First Mortgage Bonds. The bonds are not
subject to AMT tax.
The bonds were issued in two series - $13 million priced at a 4.75
percent coupon rate with a yield of 4.9 percent and $62 million priced
at a 5 percent coupon rate with a yield of 4.875 percent. Both series
mature in 2040 with a 10-year call at par provision. The bonds were
rated by Standard and Poor’s (S&P) at AA- with a 1+ recovery rating.
Aqua received approval from the Pennsylvania Economic Development
Financing Authority for the issuance on October 1, 2009. The company
closed the transaction on November 17. The bonds were sold by an
underwriting team of Jefferies & Company, PNC Capital Markets, Janney
Montgomery Scott, Hilliard Lyons, and Boenning & Scattergood.
Aqua’s ability to access money at this favorable interest rate is a
reflection of the company’s A+ S&P corporate rating and provides the
ability to economically expand its infrastructure rebuilding program. In
2009, Aqua expects to spend approximately $236 million on infrastructure
improvements in Pennsylvania, most of which will be funded by internally
generated cash and retained earnings.
Aqua America Chairman and CEO Nicholas DeBenedictis said, "Aqua America
is investing in capital improvements in all our 13 operating states to
enhance water quality and service reliability for our customers. It is
therefore important to be able to access the credit markets in a timely
and effective manner.”
DeBenedictis said that while Aqua America has increased its capital
investment programs during this decade, it has simultaneously worked
diligently to lower its weighted average cost of debt from 7.4 percent
to 5.6 percent. This work has translated into interest expense savings
for its customers. "If we still had a 7.4 percent cost of debt, our
annual interest costs would be $22 million more than our current
interest expense. This amount would translate into an additional $2 a
month on a customer’s water bill, which is typically still the lowest of
household utility bills and we hope to keep it that way,” said
DeBenedictis.
Aqua America, Inc. is a publicly traded water and wastewater utility
with operating subsidiaries serving approximately three million people
in Pennsylvania, New York, Ohio, North Carolina, Illinois, Texas,
Florida, New Jersey, Indiana, Virginia, Maine, Missouri, and South
Carolina. Aqua America is listed on the New York Exchange under the
ticker symbol WTR. Aqua Pennsylvania is Aqua America’s largest
subsidiary and provides water and wastewater services to approximately
1.4 million people in 30 counties throughout Pennsylvania.
This release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, among
others, the effect of the company’s S&P corporate rating on its ability
to economically expand its infrastructure rebuilding program, the
company’s projected spending on infrastructure improvements, the
expected funding of most of its infrastructure improvements from
internally generated cash and retained earnings, the impact of its
capital improvements on water quality and service reliability, the
company’s hope to keep water bills the lowest of household utility bills
and the expected use of the proceeds of the bonds. There are important
factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements including:
general economic business conditions; disruptions in the credit markets;
and other factors discussed in our Annual Report on Form 10-K, which is
on file with the SEC. We undertake no obligation to publicly update or
revise any forward-looking statement.
WTRF
