Santee Cooper Board approves $638.2M in bond sales
Transactions to bring $134M in NPV savings
MONCKS CORNER, S.C. – Continuing its work to reduce debt and costs to customers, the Santee Cooper Board of Directors approved $638.2 million in bond sales today that will do two things:
- Refund $569.6 million of existing debt at lower interest rates, which also reduces the average life of the bonds
- Provide $100 million to use toward capital projects
The transaction includes the sale of $338.5 million of 2020 Refunding and Improvement Tax-Exempt Series A bonds and $299.7 million of 2020 Refunding Taxable Series B. The 2020A Bonds mature in the years 2021 – 2043 and the 2020B Bonds mature in the years 2025 – 2032.
The 2020A proceeds will refund bonds totaling $292.4 million and provide new money proceeds of $100 million, which includes a premium above par, to use for capital projects. Due to current tax regulations, the 2020B Refunding is a taxable advanced refunding. The 2020B proceeds will be used to refund $277.2 million in bonds. Both series have a closing date of Nov. 5, 2020.
The all-in true interest cost for this transaction is 2.87% and the refundings are projected to produce approximately $134 million net present value savings (approximately $330 million gross savings). The refundings also shorten the average life of the bonds from 21 years before the transaction to 13 years after.
“Today’s transaction demonstrates our commitment to create real savings for customers by strategically managing debt,” said President and CEO Mark Bonsall. “So far in 2019 and 2020, we have paid off over $650 million, thus eliminating future interest charges on that debt, and refunded another $721 million to successfully take advantage of lower interest rates.”
The transaction was led by Barclays Capital Inc. (2020A Bonds) and BofA Securities (2020B Bonds), with American Veterans Group, Citigroup Global Markets Inc, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and TD Securities (USA) LLC acting as co-managers. American Veterans Group is a certified Service-Disabled Veteran Owned Small Business operating in the debt and equity markets, which reinvests 25 cents of each dollar it earns back into military veteran causes.
Demand for the offering was strong, drawing $3.5 billion in investor orders. “The transaction was a tremendous success. It shows in the pricing, and it shows in the savings,” said Michael Mace, managing director of financial advisor PFM.
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John Daniel, managing director of Barclay’s, said the transaction “lays a good foundation for future refinancing options” as Santee Cooper continues to execute its debt management strategy. “There was a lot of breadth in terms of participation up and down the curve.”
The Final Official Statement for these bonds will be available by contacting Santee Cooper Bondholder Relations at 1-877-246-3338. It will also be posted at santeecooper.com on the Investors page.