Oklahoma utility taps local banks to raise $125m

The Public Service Company of Oklahoma has renewed a three-year loan using an unusual financing arrangement.

Public Service Company of Oklahoma, a subsidiary of US utility American Electric Power, has renewed a $125 million loan with a bank consortium to finance its electricity distribution.

PSO said the extension of the three-year unsecured loan will help it maintain and upgrade its electric system assets. The group of lenders, all regional banks, include lead arranger BOK Financial as the lead arranger, Arvest Bank, AVB, BancFirst, First National Bank Shawnee, Mabrey Bank, MidFirst Bank and Prosperity Bank.

Financing arrangements used to be limited to national financing institutions, PSO said, but using local banks has allowed it to expand its funding strategies.

“Raising capital within our service territory with this type of loan makes good business sense,” said Steven Fate, vice-president of regulatory and finance at PSO. “This transaction allows us to maintain the diversity of our lender base and provides the needed financing with debt that is shorter-term than we typically use. In the process, we've strengthened relationships with banks operating within our service territory.”

PSO is headquartered in Tulsa and manages 3.8GW of generating assets serving 545,000 customers. American Electric Power, its parent, is one of the largest utilities in the US with 31GW of generating capacity. In September, it sold four natural gas and coal-fired facilities to the Blackstone Group and Arclight Capital for $2.17 billion.