NextEra Energy announced sale of $2.5 billion of equity units
NextEra Energy announced that it has agreed to sell $2.5 billion of equity units to J.P. Morgan, Wells Fargo Securities, and BofA Securities. The transaction is expected to close on Feb. 21, 2020.
Each equity unit will be issued in a stated amount of $50. Each equity unit will consist of a contract to purchase NextEra Energy common stock in the future and a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings, Inc. debenture due March 1, 2025, to be issued in the principal amount of $1,000. The debentures will be guaranteed' parent company, NextEra Energy, Inc. Total annual distributions on the equity units will be at the rate of 5.279%, consisting of interest on the debentures and payments under the stock purchase contracts.
Each stock purchase contract will require the holder to purchase NextEra Energy common stock for cash, based on a per-share price range of $282.04 to $352.55. The higher end of this price range reflects a premium of 25% over the New York Stock Exchange closing price of NextEra Energy common stock on Feb. 18, 2020, which was $282.04. The holders must complete the stock purchase by no later than March 1, 2023, and their purchase obligations may be satisfied with proceeds raised from remarketing the debentures that comprise part of their equity units.
The net proceeds from the sale of the equity units, which are expected to be approximately $2.42 billion (after deducting the underwriting discount and other offering expenses), will be added to the general funds of NextEra Energy Capital Holdings. NextEra Energy Capital Holdings expects to use its general funds to fund investments in energy and power projects and for other general corporate purposes, including the repayment of all or a portion of NextEra Energy Capital Holdings' outstanding commercial paper obligations.