20081103_2394.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
WORKING FILE
FROM:TERRI CARLOCK
DATE:OCTOBER 30, 2008
SUBJECT:VISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
ISSUE UP TO $225,000,000 OF DEBT SECURITIES;
CASE NO. A VU-08-
On October 10, 2008, A vista Corporation (A vista) requested authority to issue up
to $150 million in various debt arrangements. On October 17, 2008 an amended request was
made to increase the authority to $225 million. The requested increase was due to the changing
unpredictable and volatile market environment along with investor acceptance of various debt
instruments at a point in time.
Avista s current bond ratings are Baa2 by Moody s and BBB+ by S&P.
The debt instruments are expected to be secured, fixed or floating rate
instruments. A vista will only enter into transactions where the fees, interest rates and expenses
are competitive with market prices for similar transactions. The term may exceed 364 days but
will be no more than 3 years.
The Company also requests authority to issue, redeem and reissue securities under
this authority without further Commission approval to allow additional flexibility. The issuance
will allow the Company greater flexibility to manage its funds and minimize borrowing costs
thereby permitting the Company to better manage its debt and capital in a more efficient and cost
effective manner.
The proceeds will be used for one or more of the following purposes: (a) the
Company s construction, facility improvement, and maintenance programs, (b) to retire or
exchange one or more outstanding stock, bond, or note issuances, (c) to reimburse to the treasury
DECISION MEMORANDUM OCTOBER 30, 2008
for funds previously expended, and (d) for such other purposes as may be permitted by law.
More specifically, the Company anticipates using the proceeds from the issuance of the securities
to maintain liquidity and refinance debt maturities. A $25 million maturity is due in December
2008. Depending on the liquidity ofthe pollution control bond market, proceeds may be used to
meet the mandatory retirement of$83.7 million of pollution control bonds on December 30
2008. In March 2009 , $60 million of trust preferred securities can be optionally redeemed when
the fixed interest rate period ends. For some time the trust preferred markets have not been
liquid so the rates have been very high. It will likely be cost effective for A vista to redeem these
securities.
STAFF RECOMMENDATION
Staff recommends approval of the requested $225 million debt securities. Staff
also recommends the authority under this approval be continuing to allow issuance, redemption
and reissuance of securities under this authority without further approval. Staff recommends
notification of issuances and standard reporting requirements. No debt issuances will be utilized
to pay stock dividends.
COMMISSION DECISION
Does the Commission wish to approve the requested authority of $225 million
debt with the recommended notification and reporting requirements?
Terri Carlock
udmemos/avuuO8.2 dec memo
DECISION MEMORANDUM OCTOBER 30, 2008