California Water Service Group CWT announced that its unit California Water Service Company (Cal Water) has sold $150 million in principal amount of First Mortgage Bonds in a private placement. The bonds were issued in four series.
The bonds consisted of $50 million of 3.33% Series QQQ maturing Oct 15, 2025, $50 million of 4.31% Series RRR maturing Oct 16, 2045, $40 million of 4.41% Series SSS maturing Apr 16, 2046, and $10 million of 4.61% Series TTT maturing Apr 14, 2056. Of these, the Series QQQ and RRR closed on Oct 13, 2015 and the Series SSS and TTT will close on Mar 11, 2016 subject to customary closing conditions.
The company intends to utilize a portion of the net proceeds from the sale of the bonds to lower its outstanding short-term borrowings. Cal Water has plans to add the remainder of the net proceeds to its general funds to be used for general corporate purposes, including capital projects.
Interest accrued on the bonds will be paid semi-annually in arrears. The financial strength of the company will enable it to service the capital costs. The company exited the second quarter with cash and cash equivalents of $24.5 million, 25% higher than $19.6 million at end 2014.
California Water Service Group has a customer-first approach and focuses on operating efficiently and investing prudently in capital to deliver high-quality, reliable water service to its customers.
In recent times, drinking and wastewater infrastructure in the U.S. has been in the spotlight. A careful analysis by the American Water Works Association (AWWA) showed that about $1 trillion will be needed over the next 25 years only to restore underground pipes.
Another big operator in this space, American Water Works AWK, recently joined a campaign called ‘Imagine a Day Without Water’ to increase awareness and educate users about the current challenges being faced by the operators in this water space.
California Water Service Group currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the water utility space are Aqua America Inc. WTR and Veolia Environnement S.A. VEOEY. Veolia Environnement currently sports a Zacks Rank #1 (Strong Buy) while Aqua America has a Zacks Rank #2 (Buy).
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