The Successful Investor Hotline – Friday, December 13, 2013

Article Excerpt

FORTIS INC., $30.12, Toronto symbol FTS, fell 4% this week after it agreed to buy UNS Energy Corp. (New York symbol UNS), which distributes electricity and natural gas to 654,000 clients in Arizona. UNS also operates power plants with a total capacity of 2,420 megawatts. These facilities get their power from coal (59%), natural gas (34%), solar (1%) and other fuels (6%). Fortis will pay $4.3 billion U.S., which includes assuming $1.8 billion U.S. of UNS’s debt. This is a big purchase for Fortis, which has a $6.4-billion (Canadian) market cap (or the value of all its outstanding shares). The company aims to complete the deal by the end of 2014. After the purchase, Fortis will pay an additional $200 million U.S. to help UNS fund its planned purchases of two gas-fired plants. That will lower its reliance on coal. Fortis will have to borrow the cash it needs to buy UNS. That will push up its long-term debt to around $11.4 billion,…