July 6 (Bloomberg) -- Duke Energy Indiana Inc., the electricity provider building a coal gasification plant in the state, is marketing $500 million of bonds to help fund the power facility’s construction and to repay bank debt.
The 10-year first-mortgage bonds may be sold as soon as today and pay about 80 basis points more than similar-maturity Treasuries, according to a person familiar with the transaction.
Duke Energy Indiana is selling bonds for the first time since March 2009, when it issued $450 million of notes, according to data compiled by Bloomberg. The company is building a coal gasification plant in Edwardsport, Indiana. It increased the project’s estimated cost in April by $530 million to $2.88 billion.
A portion of proceeds from the debt sale will be used to fund the coal plant’s construction, said Tom Shiel, a spokesman for Duke Energy Corp., the Charlotte, North-Carolina-based utility that owns Duke Energy Indiana.
Other proceeds may be used to repay bank debt, and for general corporate purposes, Shiel said.
The Edwardsport plant is more than 55 percent complete, and is expected to be operational in 2012, James Rogers, the parent company’s chief executive officer, said in a May 4 earnings call.
“The main drivers for the increase are design evolution and scope growth arising from the uniqueness, complexity and scale of this plant,” Rogers said. “This is the first time a plant using this advanced cleaner-coal technology has been built anywhere in the world at this scale.”
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