Power firm in deal to cut debt

Monday, Feb. 3, 2003 | 11:20 a.m.

SUN STAFF AND WIRE REPORTS

Sierra Pacific Resources, owner of Nevada Power Co. of Las Vegas, today said it will exchange 30 percent of its convertible securities for stock to cut the company's debt by $105 million.

Buying back the premium-income-equity securities also will save Sierra Pacific about $26 million in interest expenses that would have been due through the November 2005 conversion date, the company said in a statement. The securities have a face value of $50.

In April, Sierra Pacific and its units -- Nevada Power and Sierra Pacific Power Co. of Reno -- lost investment-grade credit ratings after regulators barred Nevada Power from making customers pay for $437 million in costs accrued during an energy crisis in 2001. The company had $2.99 billion in long-term debt as of Sept. 30.

Sierra Pacific will issue 13.7 million shares in exchange for 2,095,650 of the convertible securities by Wednesday. The company has no plans to offer stock for other outstanding securities, Sierra Pacific said.

The securities included a senior unsecured note and a $50 stock purchase contract, spokesman Karl Walquist said. The amount of shares is determined by the stock's average trading price for a certain period before the conversion date. The securities would have converted to 7.6 million shares in November 2005.

"During the first quarter of this year, we intend to pursue further actions that will continue to improve our balance sheet and liquidity," said Chairman and Chief Executive Walter Higgins. "Those actions will be announced promptly as they occur."

New York Stock Exchange-listed Sierra Pacific shares traded this morning at $5.12, up 49 cents, or 11 percent.

The shares have fallen 70 percent in the past year.