Sierra Pacific $300 mln convertible PIES talked at 8.75-9.25% yield, 18-22% premium

By Ronda Fears

Nashville, Tenn., Nov. 6 - Sierra Pacific Resources plans to sell $300 million of four-year convertible premium income equity securities (PIES) with pricing guidance indicating an 8.75% to 9.25% yield and an 18% to 22% initial conversion premium. Lehman Brothers is bookrunner of the registered deal, which is scheduled to price early next week.

Las Vegas-based Sierra Pacific said proceeds would be used for general corporate purposes, which may include financing the activities and capital expenditures of its utility subsidiaries, financing of assets and refinancing existing borrowings. Merrill Lynch & Co., Goldman Sachs & Co. and Wachovia Securities are co-managers of the deal. There is a $45 million greenshoe available.

On Tuesday, Sierra Pacific reported third quarter earnings of $80.4 million, or 89c per share, compared with a net loss of $19.5 million, or 25c per share, for third quarter 2000. Revenues rose to $1.97 billion from $868.2 million. The third quarter results represent an important initial sign of recovery from the severe financial pressures faced by the company over the last year due to high fuel and purchased power costs, the company said.

Earnings recovery was aided by a Nevada law passed earlier this year that ensures the company's two utility operations, Nevada Power and Sierra Pacific Power, can recover costs for power and fuel that they purchased to meet customer needs, the company said. The same law allows the state's public utilities commission to spread costs over three years in new rates, thus reducing the volatility of customer rates.

Nevada Power expects to file with the Public Utilities Commission of Nevada by early December to recover deferred energy costs and Sierra Pacific Power will file for recovery during the first quarter of 2002, the company said. On Monday, Sierra Pacific Power received a final order from the Public Utilities Commission of Nevada that allows full recovery of recent wholesale gas purchases, with the recovery spread over a three-year period.

Year-to-date, though Sept. 30, Sierra Pacific recorded net earnings of $51 million, or 62c per share, versus a net loss of $21.5 million, or 27c per share, for the first nine months of 2000. Revenues were $3.865 billion, up from $1.74 billion.

Sierra Pacific common shares closed down 49c to $13.90.

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