CenterPoint Energy Inc. (CNP) yesterday announced a follow-on public offering of 21 million shares of its common stock. In the offering the underwriters have an option to purchase 3.2 million shares to cover any overallotments.

The company plans to use the net proceeds from the offering for general corporate purposes, repayment of borrowings under its revolving credit facility and disbursing loans to its subsidiaries Incorporatedluding CenterPoint Energy Resources Corp., to fund its recent gas gathering project.

CenterPoint Energy Resources agreed to enter the project with indirect, wholly owned subsidiaries of EnCana Corp. (ECA) and Royal Dutch Shell Plc (RDSA). According to the agreement, CenterPoint Energy will enlarge the capacity of the Haynesville Shale facility to gather and treat up to 700 million cubic feet per day (MMcf/day) of natural gas from its current capacity of about 100 MMcf/day.

The company’s weak balance sheet will not be put to further pressure through this earnings-dilutive issuance. As of now, CenterPoint has 365.4 million shares outstanding. Despite management’s efforts to improve the company’s financial position, the balance sheet position remains stretched, with the debt-to-capitalization ratio at a high 83.4% after the end of the first half of fiscal 2009. The company now has five times debt over equity and an interest coverage ratio of 2.1.

CenterPoint Energy is a domestic energy delivery company that includes electricity transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations. They serve customers in Arkansas, Illinois, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, Texas and Wisconsin.

We maintain our market Neutral recommendation on the stock.

Zacks Investment Research
View original at: Zacks.com News Feed

1. (CEG) Constellation Energy Group Paying Back DebtConstellation Energy Group, Inc. (CEG) announced that it has repaid a $500 million, 6.125% fixed-rate...
2. (TNE) Tele Norte Leste Participações S.A. Deep in DebtLast week, Tele Norte Leste Participações S.A. (TNE) posted disappointing results for the second quarter...
3. (AUY) Deep-In-The-Money Covered Calls: How to Lower Your Investment Costs and Your Riskby Karim Rahemtulla, Advisory Panelist Recently, I explained the nuts and bolts of covered call...
4. (IP) AuthenTec: Cheap By Many Measures, Especially Net Net Deep ValueWe’ve had quite a recovery in the market from the lows reached in March, and...
5. (CDS) Poll results: How deep is the rabbit hole?I posted an opinion poll about the outlook for the US stock market a few...
6. (CDS) Poll results: How deep is the rabbit hole?I posted an opinion poll about the outlook for the US stock market a few...

Search Posts by Tag: Centerpoint Energy Inc. | CNP | ECA | Encana Corporation | RDSA | Royal Dutch Shell Plc Class A | Diversified Utilities | Utilities

RSS Feeds by Tag: Centerpoint Energy Inc. | CNP | ECA | Encana Corporation | RDSA | Royal Dutch Shell Plc Class A | Diversified Utilities | Utilities |

Other Posts by: vitalstocks | RSS Feed for this author