California Water Service (NYSE:CWT) Group has announced the issuance of $125 million in First Mortgage Bonds by its subsidiary, California Water Service Company (Cal Water). The bonds, which carry a 5.22% interest rate and are due on October 22, 2054, were sold on Monday to refinance debt and for general corporate purposes.
The bonds, designated as Series 2, will pay interest quarterly starting January 22, 2025. These bonds are on par with Cal Water's other First Mortgage Bonds and are secured by liens on the utility's properties, with certain exceptions and permitted liens.
This financial move is part of Cal Water's strategy to manage its indebtedness and maintain corporate liquidity. The net proceeds from the bond sale will be used to refinance existing debt and for other corporate needs in compliance with the California Public Utilities Code Section 817.
The 5.22% First Mortgage Bonds were not registered under the Securities Act of 1933, and as such, they are subject to restrictions on their sale in the United States. This transaction is not an offer to sell or a solicitation of an offer to buy any bonds.
This news, based on a press release statement, comes as California Water Service Group continues to navigate the financial aspects of providing water supply services. The company, listed on the New York Stock Exchange under the ticker NYSE:CWT, is headquartered in San Jose, California, and operates as a water utility company in the state.
In other recent news, California Water Service Group has seen significant developments. The company's Vice President and Chief Human Resource Officer, Ronald D. Webb, has announced his retirement effective as of March 31, 2025.
On the earnings front, the company reported a notable increase in its second-quarter earnings and revenue, with operating revenue surging by 25.9% to reach $244.3 million and net income standing at $40.6 million.
In addition to these financial results, the company has expanded its service in the Bay Area through the acquisition of Kings Mountain Park Mutual Water Company.
Analyst firm Baird has responded to these developments by raising the price target for shares of California Water Service Group to $61.00, while maintaining an Outperform rating on the stock. This adjustment follows the company's recent submission of the 2024 California General Rate Case (GRC), which proposes capital investments surpassing Baird's initial projections.
As part of its investment plans, the company has announced intentions to invest over $1.6 billion in infrastructure improvements from 2025 to 2027.
Furthermore, California Water Service Group remains committed to its environmental initiatives, planning to treat approximately 101 wells for PFAS/PFOS at an estimated cost of $226 million. These are among the recent developments for California Water Service Group as it continues to navigate the challenges and opportunities in its sector.
InvestingPro Insights
California Water Service Group's recent $125 million bond issuance aligns with its strong financial position and growth trajectory. According to InvestingPro data, the company has a market capitalization of $3.11 billion and has demonstrated impressive revenue growth of 24.25% over the last twelve months as of Q2 2024. This growth is reflected in the company's solid financial metrics, including a P/E ratio of 17.76 and a dividend yield of 2.12%.
InvestingPro Tips highlight that California Water Service Group has raised its dividend for 31 consecutive years and has maintained dividend payments for 54 consecutive years. This consistent dividend history underscores the company's financial stability and commitment to shareholder returns, which may be further supported by the recent bond issuance for debt refinancing and general corporate purposes.
Investors considering California Water Service Group may be interested to know that InvestingPro offers 9 additional tips for this stock, providing a more comprehensive analysis of the company's financial health and market position.
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