(DUK) Duke Energy Signs New Credit Facility

Duke Energy Corporation (DUK) recently announced a new $6 billion, five-year credit agreement.

Duke Energy will have immediate access to $4 billion under the credit agreement while $2 billion becomes available following the successful closing of Duke Energy’s proposed merger with Progress Energy Inc. (PGN). The merger is expected to be completed by the end of fiscal 2011.

The credit agreement replaces the company’s existing credit facility of $3.14 billion and Progress Energy’s credit facility of approximately $2 billion. We believe the new credit facility will increase the company’s available fund and extend the maturity period of debt.

At the end of third-quarter 2011, the company held current assets worth $6.27 billion and long-term debt running into $17.58 billion.

Duke Energy’s ongoing merger deal with Progress Energy once completed will create the nation’s largest electric utility, in terms of enterprise value, market capitalization, generation assets, and customer base. The combined company will have more than 7.1 million electric customers in six states (North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky) and the largest regulated nuclear fleet in the country.

Charlotte, North Carolina-based Duke Energy is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses which supply, deliver, and process energy for customers in North America and selected international markets.

Duke Energy focuses on core utility operations to build its rate base through capital expenditure investments. However, we are concerned about the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, foreign currency exchange volatility and pending regulatory cases. The company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.

DUKE ENERGY CP (DUK): Free Stock Analysis Report

PROGRESS ENERGY (PGN): Free Stock Analysis Report

Zacks Investment Research

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