Consolidated Edison (NYSE:ED) Company of New York, Inc. (CECONY), a subsidiary of Consolidated Edison, Inc. (NYSE:ED), has entered into a $700 million credit agreement to bolster its financial flexibility, the company disclosed in a recent 8-K filing with the Securities and Exchange Commission. This move, executed on Monday, aims to support the company's general corporate purposes, including potential future investments.
The 364-Day Senior Unsecured Delayed Draw Term Loan Credit Agreement, dated Monday, involves CECONY as the borrower, with a consortium of lenders facilitated by U.S. Bank National Association serving as the administrative agent, and PNC Capital Markets LLC acting as joint lead arranger and bookrunner.
On the day of the agreement, CECONY drew $500 million from this facility. The terms of the agreement allow CECONY access to an additional $200 million until February 23, 2025, under certain conditions. These conditions include the absence of any event of default or any event that might lead to a default.
The agreement stipulates that CECONY maintains a consolidated debt to total capital ratio not exceeding 0.65 to 1, and that the company or its subsidiaries do not have liens on assets exceeding ten percent of CECONY's consolidated net tangible assets. Furthermore, CECONY must avoid defaulting on material financial obligations exceeding $150 million, whether in debt or derivative obligations, excluding non-recourse debt.
The credit facility also contains customary terms that allow lenders to terminate their commitments and demand immediate repayment of the loans in the event of a change of control of CECONY or Consolidated Edison, Inc., or if CECONY defaults.
In other recent news, Consolidated Edison has been making significant financial maneuvers. The company secured a new $700 million unsecured loan, providing additional liquidity for general corporate purposes. In a move to raise further capital, Consolidated Edison also announced a major debt sale of $1.45 billion in debentures. The Q2 2024 earnings report revealed an adjusted EPS of $0.59 and an operating revenue of $3.22 billion.
Analyst firms have updated their assessments of the company with Guggenheim maintaining a Neutral rating while increasing the stock's price target to $99. BofA Securities raised its price target from $97.00 to $109.00, maintaining a Buy rating. A Citi analyst upgraded the stock rating from Neutral to Buy, and Jefferies initiated coverage with a Hold rating.
The company's subsidiary, Orange and Rockland Utilities, proposed new rate plans for 2025-2027, pending approval by the New York State Public Service Commission. The proposal outlines changes to electric and gas rates, potential incentives for energy efficiency, and plans for capital investments over the three-year period. Lastly, Consolidated Edison welcomed Kirkland B. Andrews as the new CFO.
InvestingPro Insights
Consolidated Edison's recent $700 million credit agreement aligns with its historical financial prudence and commitment to shareholder value. According to InvestingPro data, the company boasts a market capitalization of $34.07 billion and maintains a P/E ratio of 18.45, indicating a balanced valuation relative to its earnings.
InvestingPro Tips highlight ED's impressive track record of dividend payments, having raised its dividend for 50 consecutive years and maintained payments for 54 years. This consistency underscores the company's financial stability and commitment to returning value to shareholders, which is particularly relevant given the new credit facility's potential to support future investments and general corporate purposes.
The company's dividend yield stands at 3.38%, offering an attractive income proposition for investors. While InvestingPro Tips indicate that net income is expected to drop this year, analysts predict the company will remain profitable, suggesting that Consolidated Edison's financial strategies, including this new credit agreement, are aimed at navigating short-term challenges while maintaining long-term financial health.
For investors seeking a deeper understanding of Consolidated Edison's financial outlook, InvestingPro offers 7 additional tips that could provide valuable insights into the company's future performance and investment potential.
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