Caribbean Utilities Company has closed the first US$40 million tranche of an US$80 million private placement. The funds will be used to repay short-term debt and to finance ongoing additions and upgrades to its electricity generation, transmission and distribution system.
Richard Hew, CUC president and chief executive officer, said, “Significant capital investments are necessary to sustain a reliable electricity service to Grand Cayman, which CUC has remained committed to for over 50 years.”
Cayman’s utility provider is issuing three series of US$20 million 3.83% Senior Unsecured Notes that are due 28 Aug. 2039, US$40 million 4.14% Senior Unsecured Notes due 24 May 2049 and US$20 million 4.14% Senior Unsecured Notes due 28 Aug. 2049. The US$40 million Series B 4.14% Notes closed last Friday.
The debt offering was privately placed with institutional investors in the United States with RBC Capital Markets acting as sole placement agent.
The CUC chief executive said it was the company’s largest debt issuance to date.
“We are pleased to have been able to secure this financing on such favourable terms. This is a reflection of the continued stability and strong credit ratings of the Company and the jurisdiction as a whole,” Hew said, adding that CUC’s strong credit ratings had helped the company secure access to the capital markets.
The second tranche of US$40 million, consisting of the Series A 3.83% Notes and the Series C 4.14% Notes is scheduled to close on 28 Aug. 2019.
The notes will not be registered under the United States Securities Act of 1933 or under any state securities laws. This means the notes may not be offered or sold except with an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
CUC provides electricity to Grand Cayman under a non-exclusive Electricity Generation Licence that expires in 2039 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028.
Cayman’s electricity provider also announced the resignation of Alphonsus Delaney as director of CUC, following his retirement from Fortis Inc.
R. Scott Hawkes, the president and chief executive officer of Fortis Ontario, has been appointed to the CUC board of directors.
Hawkes has many years of leadership experience in electric utility operations and the governance of publicly traded companies, CUC said in a press release. He previously served as corporate secretary at CUC and vice president of corporate services, general counsel and corporate secretary at Fortis Ontario before rising to his current position as CEO.