MADISON, WI – MGE Energy Inc.’s subsidiary, Madison Gas and Electric Company (MGE), has entered into a Note Purchase Agreement to issue $50 million in senior notes, according to a recent SEC filing.
The agreement, dated October 31, 2024, involves the issuance of $25 million in 5.30% senior notes, Series A, due December 1, 2039, and $25 million in 5.59% senior notes, Series B, due December 1, 2054. The notes are expected to be issued on December 4, 2024, contingent upon standard closing conditions.
The proceeds from the sale of the notes will be used by MGE to finance capital expenditures and meet other corporate obligations. The notes will not be secured under MGE’s existing Indenture, which governs its Medium-Term Notes. They will be unsecured and will bear interest payable semi-annually, with the first payment due on June 1, 2025.
MGE reserves the right to redeem the notes at any time at par value plus accrued interest and a make-whole premium, with certain conditions applying as the maturity date approaches. Additionally, in the event of a change in control, MGE must offer to prepay the notes at par value plus accrued interest.
The agreement stipulates that MGE must maintain a debt-to-total capitalization ratio not exceeding 65%, calculated under generally accepted accounting principles, excluding certain variables. It also limits the company’s ability to issue Priority Debt, defined as secured indebtedness, beyond 20% of its consolidated assets.
The Note Purchase Agreement includes provisions for events of default, which could trigger repayment obligations, and restricts MGE from granting liens to secure its principal credit facility indebtedness without ensuring that the notes are equally and ratably secured.
The information is based on a press release statement filed with the SEC.
In other recent news, MGE Energy, Inc. has made significant strides in its financial operations.
MGE Energy announced a 5.3% increase in its quarterly dividend rate, raising it from $0.4275 to $0.45 per share. This adjustment escalates the annualized dividend from $1.71 to $1.80 per share, demonstrating MGE Energy’s commitment to delivering value to its shareholders. The new dividend will be distributed to shareholders on record as of September 1, 2024.
These recent developments reflect the company’s strategic financial management. They highlight MGE Energy’s long-term business strategy and financial resilience, as evidenced by its consistent cash dividends for over 110 years and annual dividend growth for the last 49 years.
InvestingPro Insights
MGE Energy’s recent $50 million senior notes issuance aligns with its prudent financial management strategy, as reflected in several key InvestingPro metrics. The company’s market capitalization stands at $3.24 billion, indicating a substantial market presence. MGE Energy has demonstrated a strong commitment to shareholder returns, with InvestingPro Tips highlighting that it has raised its dividend for 32 consecutive years and maintained dividend payments for 54 consecutive years. This consistent dividend policy is further supported by a current dividend yield of 2.02% and a notable dividend growth of 10.43% over the last twelve months.
The company’s financial stability is underscored by its ability to operate with a moderate level of debt, and its liquid assets exceeding short-term obligations. These factors suggest that MGE Energy is well-positioned to manage the new debt issuance effectively. Additionally, with a P/E ratio of 28.04, the stock is trading at a premium, which may reflect investor confidence in the company’s future prospects.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for MGE Energy, providing deeper insights into the company’s financial health and market position.
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