New financing technique. [Intermediate-term preferred stock]

Journal Article · Thu Jul 29 04:00:00 EDT 1976 · Public Util. Fortn.; (United States)

OSTI ID:7339858

Pompea, R G

The private placement of intermediate-term utility preferred stock issues is cited as a relatively new and highly suitable method of raising capital in many corporate financing situations. Some of the unique features that it has been possible to work out for such issues are described, demonstrating a flexibility for accommodating the special concerns of investors and corporate management alike. The security developed from the intermediate-term preferred stock meshed the desire of those seeking equity capital to obtain a lower-than-market rate and maximum prepayment flexibility with the interests of certain financing companies searching for new avenues of investment. Two distinct types of intermediate-term redemption features emerged and have withstood the rigorous test of market acceptance. The initial structure was predicted on a mutual redemption option granted to both the issuer and the holder of the stock. The alternate structure allowed the preferred to be tailored without a mutual ''put and call'' option but with an annual sinking-fund requirement that would liquidate the investment in ten years. Data are tabulated for 14 public utility issues of preferred stock amounting to $169 million placed with an intermediate-term redemption feature--nine with a mutual ''put and call'' option and the remainder with a sinking fund to retire the stock in eight to ten years. (MCW)

• OSTI ID: 7339858
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 98:3; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
296000 -- Energy Planning & Policy-- Electric Power
CAPITAL
ELECTRIC POWER
FINANCING
INVESTMENT
MARKET
POWER
PUBLIC UTILITIES