SHREVEPORT, La., Aug. 11 -- Southwestern Electric Power issued the following news release:
Southwestern Electric Power Company (SWEPCO), an operating unit of American Electric Power (NYSE: AEP), has announced a financing partnership that will promote regional economic development and provide financing to fund SWEPCO's ongoing capital needs.
SWEPCO teamed up with regional and local banks to develop a senior unsecured three-year term loan to provide $100 million financing for SWEPCO's increasing electric system assets to serve its customers.
"This financing strategy is truly a win-win for all," said Venita McCellon-Allen, SWEPCO president and chief operating officer. "It provides SWEPCO with competitive financing to support our ongoing efforts to provide reasonably priced, safe and reliable electric service. Turning to local banks to fund our capital expenditures promotes stronger economies in the communities we serve. That translates into more jobs and healthy local businesses."
Nine Arkansas, Louisiana and Texas banks that have a substantial presence in SWEPCO's service territory are participating in the financing agreement.
BOK Financial, parent company of Bank of Texas and Bank of Arkansas, served as lead arranger, administrative agent and syndication agent for the transaction. Other participating banks include:
* Arvest Bank (Arkansas)
* Regions Bank (Louisiana)
* Sabine State Bank & Trust Company (Louisiana)
* Citizens National Bank (Louisiana)
* The Bank of Fayetteville (Arkansas)
* Red River Bank (Louisiana)
* Texas Bank and Trust Company (Texas)
* Community Bank of Louisiana (Louisiana)
Having local banks provide financing for large-scale capital utility assets expands more traditional financing strategies employed by SWEPCO.
Historically, the opportunity to finance SWEPCO assets was limited to large national financial institutions with global portfolios and traditional capital markets.
"Reaching out to local banks makes good business sense," said Sandra Bennett, SWEPCO vice president, regulatory and finance. "This transaction allows us to diversify our lender base and provide financing with debt that is shorter-term than we typically use. In the process, we've established new relationships with banks operating within our service territory. We look forward to growing even stronger relationships with our new banking partners."
SWEPCO has a stable investment grade credit rating. The company estimates several hundred million dollars will be needed over the next three years to support its growing asset base including environmental controls on power plants, new customer connections, and system reliability.
Dan Ellinor, chief operating officer for BOK Financial said, "We believe this is an excellent opportunity for us to partner with other regional banks on a project which will improve and grow the power grid. SWEPCO is setting an example for others on how bringing together financial partners within the states they serve can lead to investment in all our communities."
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