Financing plans for fiscal 2015 to 2017
As of June 30, 2015, Southern Company’s (SO) total debt stood at $27.37 billion—compared to $24.98 billion at the end of fiscal 2014. The majority of the debt is long-term issuances.
Southern Company plans to fund its capex through debt issuances of nearly $14 billion by fiscal 2017. Out of this, $9.1 billion will be raised by its holding company and subsidiaries from 2015 through 2017 through the capital markets. The remaining debt will be raised by a Georgia DOE loan guarantee and securitization of one of the Mississippi power companies.
With over $27.37 billion in net worth and an EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.71 billion for 2Q15, Southern Company is highly leveraged. In 2Q15, its total debt-to-EBITDA ratio was 16.01. It total debt-to-equity ratio was 1.31.
However, its leverage—as reflected in debt-to-EBITDA ratio—is moderate compared to its peers like Duke Energy (DUK), NextEra Energy (NEE), and Dominion Resources (D), as you can see in the above chart. These companies represent the top four holdings of the Utilities Select Sector Fund (XLU). Together, they account for nearly 32% of the total fund holdings.
Southern Company had around $813 million in cash and short-term investments. Also, Southern Company has access to $5.12 billion in unused credit facilities. The company reported that the working capital requirements can be met easily by utilizing operating cash flows, banks notes, commercial paper, and lines of credit.