Madison Gas and Electric to issue $50 million in senior notes for capital needs

Madison Gas and Electric Company, a subsidiary of MGE Energy, Inc. (NASDAQ:MGEE), entered into a note purchase agreement on Tuesday to issue $50 million in senior notes, according to a statement released in a SEC filing. The company, currently valued at $3.1 billion, operates with a moderate debt level according to InvestingPro analysis, with its stock trading near its 52-week low of $81.14.

Under the terms of the agreement, Madison Gas and Electric will issue $25 million of 5.12% Senior Notes, Series A, maturing on November 15, 2036, and $25 million of 5.76% Senior Notes, Series B, maturing on November 15, 2055. The notes are expected to be issued on November 13, subject to customary closing conditions. InvestingPro data shows the company maintains strong liquidity with a current ratio of 1.8, indicating healthy ability to meet short-term obligations.

The notes will be unsecured obligations of the company and will not be governed by the company’s existing indenture for medium-term notes. Interest on both series will be payable semi-annually each May 15 and November 15, beginning May 15, 2026.

The company stated that proceeds from the note issuance are expected to be used for capital expenditures and other corporate obligations.

The notes may be redeemed at any time at the company’s option at a price equal to 100% of the principal amount plus accrued interest and a make-whole premium, subject to certain exceptions as detailed in the agreement. In the event of a change in control, the company must offer to prepay the notes at par plus accrued interest, without a make-whole premium, if certain credit rating conditions are not met.

The agreement requires Madison Gas and Electric to maintain a consolidated indebtedness to consolidated total capitalization ratio not exceeding 65%, with calculations based on U.S. generally accepted accounting principles and certain exclusions. The company is also restricted from issuing priority debt exceeding 20% of consolidated assets, and must ensure equal and ratable security for the notes if principal credit facility indebtedness is secured. Financial metrics from InvestingPro reveal the company’s current debt-to-equity ratio stands at 0.61, with total debt of $772.13 million, demonstrating prudent debt management within its covenant requirements. Subscribers to InvestingPro can access 8 additional key financial health indicators and exclusive insights about MGEE’s debt management strategy.

This information is based on a press release statement included in a recent SEC filing.

In other recent news, MGE Energy announced a 5.6% increase in its quarterly dividend, marking the 50th consecutive year of dividend hikes. The new dividend of $0.4750 per share will be payable on September 15, 2025, to shareholders of record as of September 1, 2025. This increase raises the annualized dividend rate from $1.80 to $1.90 per share. In another development, Ladenburg Thalmann has upgraded MGE Energy’s stock rating from Sell to Neutral, setting a price target of $83.00. The upgrade is attributed to valuation factors, as the stock has underperformed the UTY index by approximately 23.4% since December 2024. These recent developments reflect ongoing strategic adjustments and investor interest in MGE Energy.

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