AltaGas Canada is slotting another piece of its capital structure into place, a $300 million senior unsecured bond that will allow the listed AltaGas spin-off to repay an inter-company loan from its parent.
The spin-off, via an initial public offering, was part of AltaGas's strategy to repay the $3 billion bridge loan it took out to finance its $8.4 billion acquisition of Washington D.C.-based gas utility WGL Holdings.
AltaGas Canada will use the proceeds of the ten-year bond offering to repay a portion of the $351.2 million it owes to AltaGas under an inter-company promissory note dated Oct. 18.
RBC Capital Markets and CIBC Capital Markets were the bookrunners on the bond, which was priced with a 4.26% coupon and closed as expected on Dec. 5.
The flotation and levering up of AltaGas Canada, a portfolio of Canadian utility and power assets, raised $911 million for AltaGas. The figure is slightly higher than previously reported because the IPO underwriters exercised a $35 million greenshoe option in full (PFR, 11/21).
Besides the inter-company loans, the spin-off started life with a $250 million term loan B and and existing debt associated with the portfolio.
“There is a lot of money that AltaGas wants to see come in before year-end to help it with its rating review," says Elias Foscolos, a senior equities analyst at Industrial Alliance Securities in Calgary. "I believe the ratings agencies just want to see that the deals have been done and the cash has come in.”