Southwest Gas seals 10-year debt package
US gas pipeline operator and distribution company Southwest Gas said March 23 it had issued $600mn of 10-year debt notes at 4.05% annual interest and extended $250mn of its current debt maturities.
The deal comes as Southwest Gas considers a fresh takeover bid of $82.50/share from the investment vehicle of billionaire Carl Icahn. Icahn has said he wants to clear out the Southwest Gas board, but had his initial $75/share bid rejected.
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The 2032 debt notes were issued in a public offering that resulted in net proceeds of around $592.7mn, after underwriting discounts and estimated expenses payable by the issuer.
Southwest Gas will use the fresh capital to pay down existing 3.875% interest notes due this year. Proceeds will also help clear outstanding amounts under its credit facility and general corporate working expenses.
The notes were issued through Southwest's subsidiary Southwest Gas Corp, which has also amended its term loan agreement with certain lenders, book runners, syndication agents and the Bank of New York Mellon.
Southwest says the new arrangement extends the maturity date out to March 21, 2023 and replaces the LIBOR interest rate benchmarks with secured overnight financing rate benchmarks. As of March 21, Southwest owed approximately $250mn in the aggregate principal of its term loan agreement.
Southwest Gas has around 2mn gas customers in Nevada, Arizona and parts of California. It has midstream gas assets through its MountainWest Pipelines division, which runs 3,500 km of gas pipelines and storage facilities in the Rocky Mountain region.
The company is focusing on regulated utility services having on March 1 announced it would spin off its wholly-owned Centuri Group subsidiary, which has unregulated utility services across the US and Canada.