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Sempra balance sheet improves; parent-level debt paydown planned
By Devika Patel
Knoxville, Tenn., June 30 – Sempra Energy plans to pay down parent-level debt with some of the proceeds from selling its Sempra Infrastructure business.
The business is being sold to KKR for $3.37 billion in cash in a sale that was announced on April 5.
The company has already made moves to strengthen its balance sheet, cutting its total debt to capitalization to 49% from 55% in 2017 and driving its FFO to debt metric down to 17%, close to its target FFO to debt metric of 16%.
“We remain committed to continue to strengthen our balance sheet,” executive vice president and chief financial officer Trevor I. Mihalik said at the company’s investor day event on Tuesday.
“Since 2017, we’ve completed a series of transactions as part of our capital rotation strategy and during that time our total debt to capitalization has improved from approximately 55% to 49% at the end of 2020.
“We were able to accomplish this while continuing to grow earnings in each of the businesses and support a healthy and growing dividend,” he said.
The company’s FFO to debt is 17% and it targets a 16% FFO to debt.
“While I certainly understand that debt to cap is only one way to measure the strength of the balance sheet, we also saw our FFO to debt metric at 17% at the end of 2020,” Mihalik said.
“We continue to see further balance sheet improvement potential with the Sempra Infrastructure transactions as we’re targeting to use a portion of the proceeds to pay down parent debt.
“Additionally, we continue to maintain strong investment-grade credit ratings and are targeting a long-term 16% FFO to debt ratio at the Sempra consolidated level,” he said.
Sempra is a San Diego-based diversified utilities company.
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