Emera is on something of a spending spree, with a series of recent acquisitions that have analysts predicting the east-coast utility will soon be tapping investors for funds.
Halifax-based Emera dropped $85-million (U.S.) on Monday to buy a 38 per cent stake in the parent to Barbados Light & Power Co. Ltd., the dominant utility on the Caribbean island. The purchase was well received by both financial analysts and the locals. Over time, Emera could increase its holding, as the rest of the utility is owned by 2,700 Barbadian shareholders, including the National Insurance Board of Barbados, which holds 23 per cent.
This is the latest expansion plan from Emera, and comes in the wake of a $76-million takeover of Maine & Maritimes Corp. and the launch of a biomass power project with a $200-million price tag.
In the Caribbean, Emera has now done three acquisitions in as many years: It owns 19 per cent of St. Lucia Electricity Services Ltd. and a 25 per cent indirect stake in Grand Bahama Power Co.
While analysts see the wisdom behind all these initiatives, Emera will need to pay for what it is buying. The Barbados acquisition, for example, was funded by tapping credit lines. BMO Nesbitt Burns analyst Michael McGowan said in a report Tuesday that the utility will likely sell $300-million to $350-million of equity at some point in 2010.
Dividend-paying stocks such as Emera are all the rage these days with income-seeking investors, so the utility would find a receptive audience for a well-priced financing.
Andrew Willis