Great Plains Energy to issue $300 to $400 million in debt this year

By Aleesia Forni

Columbus, Ohio, Aug. 8 - Great Plains Energy Inc. and its subsidiaries plan to issue between $300 million and $400 million of long-term debt this year and a further $250 million next year, the company said in its second quarter earnings presentation.

Subsidiary Kansas City Power & Light Co. will be responsible for this year's offering, using the proceeds to refinance $150 million of long-term debt due in November and to repay short-term debt.

Next year the company will sell $250 million of long-term debt, either issuing itself or through subsidiary KCP&L Greater Missouri Operations Co. The borrowings, along with proceeds from the remarketing of $287.5 million in equity units, will be used to refinance $500 million of 11.875% Greater Missouri notes due in July 2012.

The planned financings come after a bond offering earlier this year.

"We continue to make progress in refinancing our near-term maturities, and lengthening the overall duration of our long-term debt portfolio," said James Shay, Great Plains' senior vice president for finance and strategic development and chief financial officer, during the earnings conference call.

"In May, Great Plains Energy issued $350 million of 10-year debt at a coupon rate of 4.85%," he added. "Even with that transaction we still have significant refinancing requirements over the next 12 months."

Great Plains Energy plans to convert its Equity Units by June 2012, with no additional cash flow during that time.

Additionally, no equity is projected to be issued through 2013.

Partly due to an extended outage at its Wolf Creek facility, the company's funds from operations to adjusted debt ratio is currently at the lower end of the rating agency's guidelines. The company said it views this issue as temporary and expects improvements in the future.

Great Plains Energy anticipates between $200 and $240 million in negative free cash flow over the next two years, which it will finance with debt. The company said this plan will be manageable and is consistent with its credit objectives.

While net free cash flow is expected to be negative for the next three years due to environmental and transmission capital expenditures, the company also said that a positive net free cash flow is expected by 2015.

Great Plains Energy reported earnings of $43 million, compared with last year's $63.9 million. The company attributes this decrease in profit largely to the Wolf Creek outage, its organizational realignment and higher fuel costs.

Great Plains is a Kansas City, Mo., holding company for electric utilities Kansas City Power & Light and KCP&L Greater Missouri.

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