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Atmos Energy issues $325 million in senior notes

EditorLina Guerrero
Published 06/21/2024, 04:21 PM
ATO
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Atmos Energy Corp (NYSE:ATO) has completed a public offering of $325 million in senior notes, the company reported in a recent 8-K filing with the Securities and Exchange Commission. The offering, which was completed today, involves 5.900% Senior Notes due on November 15, 2033.

The Dallas-based natural gas distributor stated that the net proceeds from the offering, after deducting the underwriting discount and estimated offering expenses, amounted to approximately $338.9 million. The notes are an additional issuance of the existing $400 million in 5.900% Senior Notes due 2033.

These unsecured senior obligations are equal in right of payment to all of Atmos Energy's other existing and future unsubordinated debt. Interest on the notes will be paid semi-annually on May 15 and November 15, with the first payment including interest accrued from May 15, 2024.

Atmos Energy has the option to redeem the notes at any time, in whole or in part, at a redemption price set according to the terms of the indenture. The indenture also includes covenants that limit Atmos Energy and its restricted subsidiaries' ability to grant certain liens, engage in specific sale and leaseback transactions, and consolidate or merge with or into other companies, among other restrictions.

In the event of a default, which could include payment defaults or breaches of covenants, the trustee or holders of at least 25% of the outstanding notes may demand immediate payment of all notes, along with any accrued interest.

This financial move comes as Atmos Energy continues to serve as a key player in the natural gas distribution market, classified under the Standard Industrial Classification code 4924. The information disclosed is based on the company's SEC filing.

In other recent news, Atmos Energy Corporation issued $325 million in additional Senior Notes. The offering, registered under the Securities Act of 1933, is anticipated to bring in net proceeds of about $338.9 million. These funds are expected to be used for general corporate purposes, such as repaying debt, funding capital expenditures, or other business investments.

Wells Fargo upgraded Atmos Energy's stock from Equal Weight to Overweight, acknowledging robust customer growth and a strong presence in Texas. Meanwhile, Mizuho Securities raised its price target for Atmos Energy shares to $138 from $133, following the company's strong Q2 fiscal year 2024 performance.

The company reported earnings of $2.85 per share, surpassing the market estimate of $2.77 per share, and a net income of $743 million for the fiscal 2024 second quarter. Atmos Energy also increased its earnings per share guidance for fiscal 2024 to a range of $6.70 to $6.80. These are the latest developments in the company's financial strategy and market performance.

InvestingPro Insights

Atmos Energy Corp (NYSE:ATO), a stalwart in the natural gas distribution sector, not only shows a strong commitment to its shareholders with a track record of increasing dividends for 42 consecutive years but is also poised for stability with analysts revising earnings upwards for the upcoming period. The company's strategic financial management is evident from its recent successful offering of senior notes.

According to InvestingPro data, Atmos Energy boasts a market capitalization of $17.57 billion and trades at a P/E ratio of 17.37, reflecting investor confidence in its earnings potential. While the company's revenue saw a decline of 11.13% over the last twelve months as of Q2 2024, its gross profit margin remains robust at 56.55%, indicating efficient control over costs. Additionally, with a dividend yield of 2.75% as of the last dividend ex-date, Atmos Energy continues to reward its investors consistently.

InvestingPro Tips also highlight that Atmos Energy's stock typically experiences low price volatility, suggesting it could be a suitable option for investors seeking stability in their portfolio. Moreover, the company's liquid assets surpass its short-term obligations, ensuring financial flexibility. For investors looking to delve deeper into Atmos Energy's financial health and future prospects, InvestingPro offers additional tips and metrics. Use coupon code PRONEWS24 to receive an extra 10% off on a yearly or biyearly Pro and Pro+ subscription, and explore the 5 additional InvestingPro Tips available for Atmos Energy at https://www.investing.com/pro/ATO.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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