Indiana Michigan Power, local banks partner to strengthen regional economy

Indiana Michigan Power logo

News release from Indiana Michigan Power:

Indiana Michigan Power, local banks partner to strengthen regional economy

(May 31, 2012) – Indiana Michigan Power (I&M), a subsidiary of American Electric Power (NYSE:AEP), today announced a financing partnership that will promote regional economic development and provide necessary capital as the company takes steps to invest billions of dollars to modernize the company’s generation fleet and address expenditures necessary to comply with new environmental regulations.

I&M teamed up with executives from regional and local banks to develop a senior unsecured term loan facility to provide $110 million in intermediate-term financing for infrastructure development.

“This financing strategy is a true win-win,” said Paul Chodak, I&M’s President and Chief Operating Officer. “It provides I&M financing on competitive terms to support our ongoing efforts to provide reasonably-priced electric service now and in the future. Turning to banks within our region to fund our capital expenditures promotes a stronger local economy. That translates into more jobs and healthy local businesses.”

A total of 11 banks that have a combined 395 branches across Indiana and Michigan are participating in the financing agreement. PNC Financial Services and Fifth Third Bancorp served as agents banks. Other participating banks include:

· Chemical Financial Corporation
· Centier Bank
· 1st Source Corporation
· First Merchants Corporation
· Lake City Bank
· Old National Bancorp
· MutualFirst Financial, Inc
· Salin Bancshares, Inc.
· STAR Financial Group, Inc.

Including local banks to provide financing for capital expenditures on such a large scale expands on more traditional financing strategies employed by I&M. In recent years, the opportunity to finance large capital projects was commonly limited to larger financial institutions with global portfolios and the traditional capital markets.

“Raising capital within our service territory makes perfect sense,” remarked Allen Glassburn, I&M’s Vice President of Regulatory and Finance. “This transaction allows us to build liquidity and diversify our lender base. In the process, we’ve established new relationships with banks operating within our region who are also our customers. I&M looks forward to continuing strong relationships with our new banking partners.”

Electric utilities have traditionally been considered a safe investment because the need for energy will not become obsolete. I&M has a stable investment grade credit rating. The company estimates that between $1 and $2 billion will need to be invested at the Rockport Power Plant in southern Indiana to fund environmental retrofits and at the Cook Nuclear Plant in southwest Michigan to fund projects designed to keep the plant operating during its extended operating license period. As I&M repays loans made available through this lending agreement, that money will be directed into the local and regional economy as banks make loans from those funds.

Lawrence J. (Larry) Mayers, Regional President of 1st Source Bank in Fort Wayne, commented, “As a community bank, we are pleased to partner with I&M to help build and revitalize their infrastructure for the long-term. And, as a local bank with a 150 year history in Indiana, we are gratified with I&M’s investment in our community for the long-term well-being of our citizens, clients and businesses.”

CFSD Group LLC served as advisor to Indiana Michigan Power in this transaction.

LEAVE A REPLY

Please enter your comment!
Please enter your name here