El Paso, the largest US natural gas pipeline owner, has said that it plans to sell $1.51 billion in securities to raise cash and slash debt to keep an investment grade credit rating.
The company next week will sell forty five million shares of common stock, valued at $1.01 billion based on yesterday's closing price, El Paso said in a statement. It is offering $500 million of equity units, which will convert to common stock and a senior note in three years.
El Paso, whose stock has tumbled by fifty one percent already this year, and rivals have been selling assets and shares to assure investors they will not collapse like Enron Corp. Energy company finances face closer review from credit rating services and regulators after Enron hid debt and inflated revenue. Earnings in the first quarter were hurt by lower electricity and gas prices.
“I'm surprised they can do so much on the equity side,” said James Cusser, who has El Paso bonds among $1.3 billion he manages at Waddell & Reed Inc. “There were some long faces around here when El Paso announced they were selling stock two weeks ago.”
First and foremost, it goes about the replacement of the French-Russian SaM146 engine with the Russian PD-8 aircraft engine