TVA Saves $3.3 Million in Interest Expense
April 26, 2002
TVA exchanged $936 million principal amount of newly issued 6.79-percent putable power bonds for outstanding 7.14-percent power bonds issued in 2000, which resulted in lowering TVA’s annual interest expense by $3.3 million.
“Cost-effective financing will help TVA continue to provide affordable, reliable power for the people of the Tennessee Valley,” said TVA Chairman Glenn McCullough Jr. “This bond exchange demonstrates TVA’s ability to lower the cost of borrowing by matching investors’ needs with our financing objectives, which is consistent with the TVA Board’s emphasis on excellence in our business performance.”
TVA exchanged its newly issued 6.79-percent 2002 Series A power bonds due May 23, 2012, for outstanding 7.14-percent 2000 Series F power bonds due May 23, 2012. The new bonds mature in 2012 and provide an opportunity for early redemption on May 24, 2004. This early redemption feature is designed to entice investors to exchange their 7.14-percent bonds for the lower coupon.
The original bonds were issued in May 2000 as 12-year bonds, putable in May 2002. The offering was reopened in July 2000 in response to high investor demand.
“The exchange appealed to investors interested in high-quality securities that contain the flexibility of a put option as part of a diversified portfolio,” said TVA Chief Financial Officer David Smith. “The ability to execute this exchange provided value for the investor while reducing TVA’s interest expense.”
Morgan Stanley & Company was the exclusive dealer manager for the exchange, and D. F. King & Company Inc. was the information agent. The exchange offer is completed and will not be extended.
TVA’s power bonds are traded on the bond market of the New York Stock Exchange, and its Putable Automatic Rate Reset Securities are traded on the New York Stock Exchange under the symbols TVC and TVE. All of TVA’s securities are publicly held.
TVA is a wholly owned U.S. Government agency and the nation’s largest public power system. Its power system is self-supporting through power revenues and proceeds from the issuance of debt. TVA provides power to large industries, federal agencies, and 158 power distributors that serve 8.3 million consumers in seven southeastern states.
Media Contact:
John Moulton, Knoxville (865-632-8048) or TVA News Bureau (865-632-6000)
