Allegheny Energy to redeem 10¼% notes, 13% notes

By Jennifer Chiou

New York, July 21 - Allegheny Energy, Inc. announced the redemption of its $331 million of 10¼% senior notes due 2007 and $35 million of its 13% senior notes due 2007.

The redemptions are expected on Aug. 22.

Partial proceeds from subsidiary Allegheny Energy Supply Co., LLC's new $1.07 billion term loan due 2011 will be used for the 10¼% notes and have already contributed to refinancing Allegheny Energy Supply's $738 million term loan.

The new loan has an interest rate of Libor plus 175 basis points.

The company will use cash on hand and may also borrow under Allegheny Energy's revolving credit facility to redeem its 13% notes.

"Refinancing higher-cost debt through these transactions is expected to reduce our annual interest expense by approximately $23 million, further improving our profitability," Allegheny Energy chairman, president and chief executive officer Paul J. Evanson said in a news release.

Citigroup Global Markets Inc. is the lead arranger and Bank of America LLC and Credit Suisse First Boston are joint bookrunners for the loan.

Based in Greensburg, Pa., Allegheny Energy is an investor-owned utility.

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