Potomac Electric Power Co. (PEPCO) may raise up to $1 billion via a bank facility or a bond issue or to partially finance the $2.2 billion purchase of Conectiv's electricity business, which it announced last week. PEPCO has not lined up any banks to lead the financing, Tony Kamerick, treasurer in Washington, D.C., told Power Finance & Risk, an LMW sister publication. Kamerick explained the company would consider Merrill Lynch, which advised on the acquisition, but said, "It is not locked to anybody." Pricing as well as flexibility are some of the criteria it will consider in its bank selection.
Kamerick says it will finance at least $500 million of the purchase price with the proceeds of $2.8 billion it raised from the sale of generation assets to Mirant, formerly Southern Energy Inc. A PEPCO spokesman explains some of the cash from the Mirant sale has already been allocated or earmarked for other purposes, including a $450 million stock buy back program.
PEPCO has about $1.86 billion in outstanding debt. It last came to market in April 1999 with a $270 million 6% first mortgage bond. Legg Mason was lead underwriter on the deal.