Texas-New Mexico Delays Debentures After Getting Loan Payment Extension
Texas-New Mexico Power Co. postponed a $150 million high-yield debenture issue when it won a 90-day extension on a construction loan payment due last Monday.
Chase Manhattan Bank, agent for the company's two banking groups, confirmed Monday that the banks had granted an extension on an $85 million payment due on Unit 1 of TNP One, the company's two-unit, 300-megawatt generating station in Robertson County, Tex., the company said yesterday.
The company had planned to use proceeds from the $150 million offering to make the $85 million Sept. 23 payment, Monte Smith, the company's treasurer, said earlier.
In return, Texas-New Mexico will pay added fees and higher interest rates on the Unit 1 loans. The company plans to meet with its banks to discuss future financing. No meeting date has been set, Mr. Smith said. Chase and the banking groups will continue to work with Texas-New Mexico, Chase spokeswoman Amy Sudol said yesterday.
Also yesterday, Texas-New Mexico announced plans to file a registration statement for first mortgage bonds. The issue's amount is undetermined as yet, Mr. Smith said. The company plans to issue them before the 90-day period expires, he said.
In addition, the Texas-New Mexico plans to secure other permanent financing to meet $223 million in payments, including the $85 million, needed to reschedule Unit 1 and Unit 2 payments as outlined in an earlier agreement with the banks.
On Sept. 12, Texas-New Mexico announced an agreement in principle with Chase on changes in the company's construction financing facilities for TNP One, Units 1 and 2.
The agreement called for rescheduled payments provided Texas-New Mexico raised at least $223 million through debt or equity securities sales by Jan. 2, 1992 and prepaid $181 million to its Unit 1 and 2 lenders. The $85 million Sept. 23 payment granted the extension is included in that $181 million. Unit 1 lenders will then grant Texas-New Mexico a 15-month debt payment extension, while Unit 2 lenders will grant a 14-month reprieve.
The postponed $150 million offering was to be part of that $223 million figure. The company may or may not decide to go forward with that particular $150 million issue, Mr. Smith said.
Price talk early last week on that seven-year, $150 million offering called for a 12 1/4 to 12 1/2 coupon, yielding 500 basis points over comparable Treasuries. But analysts last week said the company appeared to be having trouble rounding up buyers and would have to offer a higher yield to get the deal done. Lehman Brothers was the underwriter.
Meanwhile, the road show is under way for a $150 million senior note offering by Varity Corp., another high-yield issuer.
Junk bond prices were largely unchanged, while high-grades were up 1/8, traders said.
Tapping the investment-grade market yesterday was Carolina Power & Light, which issued $100 million of noncallable first mortgage bonds maturing 2021. The 8.625% bonds were priced at 99.625% to yield 8.66% or 80 basis points over comparable Treasuries. Kidder, Peabody & Co. lead managed the offering. Moody's Investors Service rates the deal A2, while Standard & Poor's Corp. assigns it an A.
Elsewhere, Eastman Kodak Co. filed a $1.6 billion shelf registration with the Securities and Exchange Commission, Paul Allen, a spokesman for the company said. Proceeds will be used to reduce outstanding debt, he said.
As for asset-backed securities, Merrill Lynch Mortgage Investors Inc. 1991G issued over $138.7 million of 8.15% certificates backed by fixed-rate housing contracts and installment loan agreements. The certificates were priced to yield 8.253% or 135 basis points over interpolated 4.5-year Treasuries. The loans were originated by Green Tree Acceptance Inc., which will continue service the loans. Moody's rates the certificates Aa2.
Standard & Poor's has downgraded Adience Inc.'s approximately $66 million of senior subordinated reset notes to CCC-plus from B-minus and places the rating on CreditWatch for a possible downgrade.
The implied senior debt rating is B.