LIPA Completes 2006 Plan of Finance Refinancing $2.2 Billion of Long Term Debt
Aggregate Refinancings Will Produce Savings of $115 Million
Uniondale, NY – December 14, 2006 – Long Island Power Authority (LIPA) Chairman Richard M. Kessel announced today that a just completed bond offering, together with three prior refinancings this year, will save the Authority $115 million in debt service on a net present value basis because of the extremely favorable rates that LIPA’s bonds received from
the market.Â These savings will be used to hold down LIPA’s costs and help stabilize electric bills at their new lower rate through next year.
“Favorable bond market conditions, together with LIPA’s improved credit quality have allowed LIPA to capture these savings for our customers” said Mr. Kessel.Â “We’re extremely pleased with the confidence the bond market has placed in LIPA’s long-term bonds. It demonstrates that LIPA is financially sound, and lowering our debt service by $115 million will provide customer savings over both the short and long term.”
LIPA expects to close on the final leg of its 2006 Plan of Finance, a $518 million offering of General Revenue Bonds, on December 20, 2006. The Series 2006F Bonds will advance refund bonds issued by LIPA in 1998, 2001 and 2003.Â The Series 2006F Bonds will produce net present value debt service savings of $28.5 million.Â When priced on December 7, 2006 the financial market responded favorably to LIPA’s bond offering by setting an average yield of 4.19% with an average life of 12.3 years.
In three separate transactions earlier this year LIPA issued its Series 2006A, 2006D, and 2006E Bonds in an aggregate principle amount of $1.7 billion to advance refund bonds issued by LIPA in 1998, 2001 and 2003. These advance refundings produced aggregate debt service savings of $86.6 million on a net present value basis.
For the bond offerings, Bear Stearns & Company served as Financial Advisor; Hawkins, Delafield and Wood LLP served as Bond Counsel; and Clifford Chance US LLP served as Disclosure Counsel.
LIPA’s senior manager group of Citigroup, Goldman, Sachs & Co., Lehman Brothers, Morgan Stanley and UBS Investment Bank lead a group of 12 financial institutions that placed LIPA’s bonds with investors.
LIPA, a non-profit municipal electric utility, owns the retail electric Transmission and Distribution System on Long Island and provides electric service to over 1.1 million customers in Nassau and Suffolk counties and the Rockaway Peninsula in Queens. In terms of customers served, LIPA is the 3rd largest municipal electric utility in the nation and the 6th largest in terms of electricity delivered. LIPA does not provide natural gas service or own any on-island electric generating assets.
LIPA Contact Information:
Media Relations: (516) 719-9892
Media Pager: (516) 525-LIPA
LIPA News Center