LONDON – National Grid Plc, Rhode Island’s dominant gas and electric utility, said Thursday it plans to raise $4.6 billion with a rights issue to fund a five-year investment program focused on the U.K.
The news sent National Grid’s shares to their lowest level in 19 months as traders reacted unfavorably to the decision to sell 990 million new shares to stockholders, a plan which CEO Steve Holliday defended as key to maintaining the company’s credit rating.
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“Many investors will feel misled by the management, who have consistently, and vehemently, denied the need for a rights issue,” Angelos Anastasiou, an analyst at Ambrian Capital Plc in London, told Bloomberg News.
National Grid said its net profit rose 47 percent to 1.4 billion pounds ($2.1 billion) in the fiscal year ended March 31, up from 944 million pounds last year. Revenue fell 10 percent to 13.99 billion pounds ($20.7 billion).
In its preliminary annual report, National Grid said it was “disappointed” with the R.I. Public Utilities Commission’s Feb. 9 decision in an electricity rate case, which provided an allowed return on equity of 9.8 percent and a $23 million increase in revenue. The utility appealed the decision to the R.I. Supreme Court last month.
National Grid also said profit from its natural gas business in Rhode Island had fallen because of “an increase in bad debts.”
Additional information is available at nationalgrid.com.
