Aqua America Subsidiary Secures $25 Million in Tax-Exempt Bonds to Finance Water Improvements
Aqua America, Inc. announced that its largest subsidiary, Aqua Pennsylvania, Inc., successfully closed a $25 million tax-exempt financing issued through the Delaware County Industrial Development Authority at yields of 4.82%.
The entire $25 million will be used to construct water infrastructure improvements between 2005 and 2008 in southeastern Pennsylvania. The work includes improvements to the company's water treatment facilities and a host of water main replacement projects in Montgomery, Chester and Delaware counties.
Aqua America treasurer Kathy Pape said she anticipates that the $25 million tax-exempt bonds will produce significant savings on the company's interest expense. "By locking in these historically low long-term interest rates, we estimate that compared to a taxable rate of approximately 5.6%, we are saving approximately $5 million in interest expense over the loan's 30-year term."
Since Aqua America began aggressively pursuing low-interest financing in 1999, the company has reduced its system-wide long-term interest rate from 7.4 to 5.76% on nearly $900 million of outstanding debt as of December 2005, representing an annual savings of more than $14 million.
"Thanks to our company's effectiveness in securing tax-exempt financing, we're able to enhance our capital program by investing the savings in additional projects, such as replacing aging pipes and upgrading treatment facilities to improve water quality and reliability," said Aqua America chairman and CEO Nicholas DeBenedictis.