By Kenneth Lim
Boston, Sept. 16 - Madison Gas and Electric Co. placed $40 million of 5.59% senior unsecured notes due Sept. 11, 2018, according to an 8-K filing with the Securities and Exchange Commission.
The notes were offered at par.
The notes may be called at any time, subject to make-whole pricing at Treasuries plus 50 basis points.
J.P. Morgan Securities Inc. was the placement agent.
The Prudential Insurance Co. of America took $36.35 million of the notes, while Zurich American Insurance Co. took $3.65 million of the offering.
The proceeds will be used to repay $30 million of 6.02% medium-term notes that matured on Sept. 15, 2008 and to repay short-term debt.
Madison Gas and Electric is the primary asset of Nasdaq-listed MGE Energy, Inc., and it is a Madison, Wis.-based regulated utility company.
The company chose to raise capital through a private debt placement instead of a public fundraising because it believed it would get better terms, Madison director of treasury management Ken Frassetto told Prospect News.
"Forty million dollars for our company is a large debt issuance, but in the public market it's a rather small issue, so at times you may get penalized for a small issue," he said.
Madison had raised some public debt in 2007, and after that experience, the company felt that a private deal was the better choice, he added.
"We found that the public market was a little tougher to get the notes placed last fall, September 2007, when the whole credit issue was just starting and the market was very volatile, even for a company with a double-A rating," Frassetto said. "And as it turns out, our public deal was done with a typical private placement investor...so this year we simply decided to avoid the public market."
| Issuer: | Madison Gas and Electric Co.
|
| Securities description: | Senior unsecured notes
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| Amount: | $40 million
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| Maturity: | Sept. 11, 2018
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| Coupon: | 5.59%
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| Calls: | Make-whole call at any time at Treasuries plus 50 bps
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| Investors: | Prudential Insurance Co. of America, Zurich American Insurance Co.
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| Settlement: | Sept. 11
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