CenterPoint Energy Issues Equity

In order to meet the future requirement of funds, CenterPoint Energy Inc. (CNP) announced that it has commenced a public offering of 22 million shares of its common stock. CenterPoint will allow the underwriters an option to purchase 3.3 million shares to cover over-allotments.
 
The offering of equity will be on the basis of shelf prospectus filed by the company with the Securities and Exchange Commission on October 9, 2008. The shelf prospectus will be treated as the prospectus for the issue. J.P. Morgan (JPM), Credit Suisse (CS), Morgan Stanley (MS) and Wells Fargo Securities (WFC) will act as joint book-running managers in connection with the offering.
 
CenterPoint intends to utilize the net proceeds from the equity offerings for general corporate purposes, repayments of loans made under its money pool, issuing loans to its subsidiaries and funding its subsidiary’s gas gathering and treating projects.
 
During the first-quarter earnings call, CenterPoint Energy reaffirmed the adjusted earnings expectation of $1.02 to $1.12 per share for 2010. The company ended the first quarter with 395 million outstanding shares. We expect the company might readjust their earnings expectation due to the increase in shares.
 
Although CenterPoint Energy has a balanced portfolio of electric and natural gas businesses, we maintain a Neutral outlook on the stock due to its pending regulatory cases, lower demand for electricity and a significant presence in the hurricane prone zone of the U.S.
 
Based in Houston, Texas, CenterPoint Energy Inc. engages in electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations. The major competitors of the company are American Electric Power Company, Inc. (AEP) and Xcel Energy Inc. (XEL).

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