Exelon Corporation's (EXC - Free Report) subsidiary Baltimore Gas and Electric Company has priced its 3.35% notes worth $300 million. The 10-year notes will mature on Jul 1, 2023. This note offering will close on Jun 17, 2013.
Exelon intends to utilize the net proceeds of the issue to repay a part of its 6.125% notes valued $400 million due on Jul 1, 2013 and use the rest for general corporate purposes.
It is a common practice among the companies to exercise new issuances to redeem their old debts while minimizing interest costs and extending repayment tenure.
Exelon and its subsidiaries issue notes from time to time and accumulate funds for repaying its existing debts and for the expansion projects. The company’s subsidiaries Baltimore Gas and Electric Company and Exelon Generation Company issued notes in Aug and Jun 2012. The net proceeds from these issues are used for general corporate purposes and to finance its debt obligations.
We appreciate Exelon’s continuous effort toward minimization of the debt burden. The company’s long-term debt as of Mar 31, 2013 was $16.2 billion, down from $17.2 billion at the end of Dec 31, 2012.
Exelon had a cash balance of $679 million as of Dec 31, 2013, while cash provided by operating activities during first three months of 2013 was $859 million. The financial strength will allow the company to pay annual interest of $10 million, which will arise from the current notes issue.
Exelon currently has a Zacks Rank #3 (Hold). The other stocks in the industry that are worth considering include CPFL Energia S.A. and Companhia Paranaense de Energia with a Zacks Rank #1 (Strong Buy), and ALLETE, Inc. (ALE - Free Report) with a Zacks Rank #2 (Buy).