AGL Energy (ASX:AGL) is reportedly tapping the U.S. bond market for about $500 million as it seeks additional capital ahead of the company’s planned demerger of its coal assets to create Accel Energy.
The Australian is reporting that the Bank of America, JPMorgan, Citi and the Royal Bank of Canada are working on the issuance for AGL. Goldman Sachs and Macquarie Group have also been retained as advisors.
AGL’s demerger of its coal-fired power generation division is expected to occur by next June, and the company is believed to have been working on a refinancing plan for some time in order to secure working capital for Accel.
It is believed that AGL is seeking the additional capital to help the demerged businesses meet their expenses and put its balance sheet in order. AGL Energy chair Peter Botten dismissed suggestions in the company’s annual general meeting that it would consider a capital raising. There has been speculation that the company is seeking additional capital to refinance debt.
Also read: Westpac Taps US Bond Market For Record Haul
According to its financial accounts, AGL had $2.98bn of net debt at June 31, with an overall debt level of about 35 per cent.
It’s been a testing time for AGL Energy with a falling share price as its energy retail business faces market disruption. Coal-fired power generation assets are also out of market favour due to significant environmental concerns.
On a year-to-date basis, AHL Energy shares have fallen 56%. They closed at $5.47 on Thursday.
