Question-and-Answer Session
Operator
(Operator Instructions) We do have a question from James Heckler of Levin Capital. Please go ahead.
James Heckler - Levin Capital
Hi, good afternoon.
Steven Lant
Good afternoon, James.
James Heckler - Levin Capital
I know you went through this, but I was wondering, I didn’t catch all of it. Could you go through again what the lag might mean in terms of earnings at the utility? You said $2.50 per share for the utility under the latest rate agreement, if you earn the full ROE, and what was the sensitivity in the ROE?
Chris Capone
James, this is Chris Capone. What I was alluding to was for each 25 basis points of ROE. So, if we under-ran for arguments sake by 25 basis points, that’s worth so to speak approximately $0.06 per share.
James Heckler - Levin Capital
Okay.
Chris Capone
And that equates to about $1 million after tax.
James Heckler - Levin Capital
Got it. Thank you.
Chris Capone
You’re welcome.
James Heckler - Levin Capital
I had a couple other things to ask about. One, you have a significant amount of cash on the balance sheet and was wondering, what is the intended use of that cash going forward?
Chris Capone
James, generally when we raise that capital, if you’ll remember back at the time during which we were raising that debt and that is the proceeds of the debt issuance that Kim alluded to the $50 million that was raised at the holding company level. That was to introduce actual leverage into a portfolio that up until that time had been fully funded with just equity.
We felt based on the opportunities that we saw going forward and the ability to raise capital during what was then a very difficult period and not really having much visibility on when that difficulty might abate, that it was still prudent to go out and raise that external capital and that will be the basis for everything from general corporate purposes to additional investments in our existing businesses as well as new assets.
James Heckler - Levin Capital
Okay. So it’s sort of pre-funding future investment in the utility and elsewhere?
Chris Capone
Correct.
James Heckler - Levin Capital
Because you had an opportunity, understand, thank you, and then given your current valuation, did you evaluate the various costs of capital of among debt, equity, etcetera, because it looks as though where your stock price is now that it might almost be at parity, the cost of equity and your cost of debt?
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