Caribbean Utilities Company has secured a $40 million loan to pay off short-term debt and to upgrade its equipment and services.
The utilities company announced last week the closing of the first tranche of a US$40 million private placement of 7.50 per cent senior unsecured notes due May 29, 2024.
The first tranche was for US$30 million and the second tranche of US$10 million is scheduled to close in July 2009.
The debt offering was privately placed with institutional investors in the United States, according to a statement released by the company.
Proceeds from the offering will be used to repay short-term debts and to finance ongoing additions and upgrades to CUC’s generation and transmission and distribution system.
President and Chief Executive Officer Richard Hew said: ‘We are pleased to have been able to secure this additional financing on favourable terms at a time when many companies are unable to access growth capital.’
He added: ‘CUC’s status as a publicly traded company with a strong debt rating helps secure access to efficient capital markets which enable us to sustain our commitment of over 40 years to reliable and efficient electrical service to Grand Cayman.’
In the absence of access to these ‘efficient sources of capital, CUC would be challenged to make the significant long-term capital investments required to meet growth and reliability requirements of Grand Cayman’, the statement said.
CUC is completing work on its Eastern Transmission Loop from Rum Point to Frank Sound which involved erecting 233 concrete poles which can withstand hurricane strength winds better than wooden ones.. It is also installing a new 16 megaWatt MAN diesel to expand generation capacity.
A senior unsecured notes loan arrangement means the lender is given priority for payouts and no collateral is given by the borrower.
According to CUC, the notes will not be registered under the Securities Act of 1933 or under any state securities laws. Unless they are so registered, the notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.