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Electric utilities

Texas-New Mexico Power Company Credit Ratings Placed on Watch by Duff & Phelps Credit Rating Co.

Strategic Insights

— 1 min read

A significant change is underway for Texas-New Mexico Power Company (TNMP), as an investor group led by CIBC World Markets and William J. Catacosinos intends to acquire the company in a cash transaction worth approximately $1 billion. This acquisition will affect around $415 million of debt, and the debt and equity will be issued by the new TNP holding company. TNMP's management team and capital structure are expected to remain unchanged.

Key Takeaways:

  • The credit ratings of Texas-New Mexico Power Company (TNMP) have been placed on Rating Watch--Uncertain by Duff & Phelps Credit Rating Co. (DCR) following the announcement of the acquisition by an investor group.
  • The acquisition is expected to be financed with $425 million of new senior notes, $100 million of preferred stock, and $100 million of common equity.
  • DCR currently rates TNMP's first mortgage bonds and senior notes 'BBB-' (Triple-B-Minus) and secured debentures 'BB+' (Double-B-Plus).
  • Approximately $415 million of debt is affected by the acquisition, which is expected to be primarily used to purchase the outstanding shares of the TNP holding company (approximately $584 million).
  • TNMP's service territory is divided into three regions: the Mountain Region, the North Central Region, and the Gulf Coast Region.
  • TNMP serves around 226,000 electric customers in Texas and New Mexico.
  • The acquisition is expected to close in the first quarter of 2000, pending regulatory approvals from the Texas and New Mexico regulatory commissions, FERC, and the SEC.

Statistics:

  • $1 billion: the approximate value of the acquisition
  • $415 million: the amount of debt affected by the acquisition
  • $425 million: the value of new senior notes to finance the acquisition
  • $100 million: the amount of preferred stock issued to finance the acquisition
  • $100 million: the amount of common equity issued to finance the acquisition
  • $584 million: the amount allocated to purchase the outstanding shares of the TNP holding company
  • 226,000: the number of electric customers served by TNMP
  • 3: the number of regions in TNMP's service territory (Mountain, North Central, and Gulf Coast)
  • 15: the number of communities in the Mountain Region
  • 56: the number of communities in the North Central Region
  • 14: the number of communities in the Gulf Coast Region
  • 2000: the expected year of completion for the acquisition

Sources:

  • Duff & Phelps Credit Rating Co. (DCR)
  • PRNewswire
  • CIBC World Markets
  • William J. Catacosinos
  • Texas-New Mexico Power Company (TNMP)
  • FERC (Federal Energy Regulatory Commission)
  • SEC (Securities and Exchange Commission)

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