Black Hills Corporation BKH announced that it has extended its unsecured revolving credit facility of $500 million. The amended facility can be increased to $750 million subject to specific conditions and has a five-year term expiring Jun 26, 2020.
The extended credit facility will be used to fund various general corporate purposes like working capital needs and others. Unchanged at LIBOR plus 112.5 basis points, the cost of borrowing under the new facility is based on the company’s credit rating. Current borrowings under the revised facility are $98 million with an additional $23 million of letters of credit issued.
Management believes that this facility will provide financial flexibility and give a boost to its growth initiatives. Investment in growth projects, purchase of natural gas for its power generation facilities and gas utilities and payment of dividends represent some of the most significant uses of Black Hills’ cash flow.
Black Hills reported first-quarter 2015 earnings of $1.07 per share, surpassing the Zacks Consensus Estimate of 99 cents by 8.1%. The company projects 2015 adjusted earnings to lie in the range of $2.80–$3.00 per share.
Cash from operating activities in the first quarter increased 54.4% year over year to $151.5 million. The extension of the revolving credit facility will support Black Hills’ combined capital outlay for its Utilities, Non-regulated Energy and Corporate segments, which is targeted at $1.35 billion from 2015 through 2017.
Rapid City, SD-based Black Hills Corporation is a diversified energy company. The utility has a customer base of 785,000 and provides electric and natural gas services in seven U.S. sates. The company also owns a coal mining facility that produces coal and sells them to electric generation facilities.
Zacks Rank
Black Hills Corporation currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space are Public Service Enterprise Group Inc. PEG, CMS Energy Corp. CMS and Alliant Energy Corporation LNT, each carrying a Zacks Rank #2 (Buy).
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