TECO Energy calls $380 million 10½% notes, aims to redeem $200 million 8½% trust preferreds

By Jennifer Chiou

New York, June 8 - TECO Energy, Inc. progressed in its debt redemption and refinancing effort by disclosing its plan to redeem its $380 million of outstanding 10½% notes due 2007.

Funding will come from the issuance of the $200 million of 6¾% notes due 2015 that priced May 23 and cash on hand.

The notes will be redeemed on June 27 at par plus remaining interest payments, discounted at an average Treasury security yield plus 50 basis points. TECO will also pay accrued interest.

TECO Energy ultimately plans to use cash generated by the business to call TECO Capital Trust's $200 million of outstanding 8½% trust preferred securities in late 2005 and early 2006.

The company also issued $100 million of floating-rate notes due 2010 that were priced June 2 and bear interest at Libor plus 200 basis points.

"The early retirement of the high-cost debt improves our balance sheet, results in improved financial coverage ratios and reduces interest expense, which helps earnings," executive vice president of finance and chief financial officer Gordon Gillette said in a news release.

"The planned retirement of the 8½% debt later this year and early next year will further improve earnings and coverage ratios."

Tampa, Fla.-based TECO Energy provides electricity to west central Florida.

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