Duke Energy greenshoe raises 4.125% convertibles to $1.73 billion

By William Gullotti

Buffalo, N.Y., April 6 – Underwriters for Duke Energy Corp.’s 4.125% three-year convertible notes (Baa2/BBB) fully exercised their $225 million greenshoe, increasing the total issue size of the deal to $1,725,000,000, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, Duke priced the initial $1.5 billion of the convertibles after market close on April 3 at par with a coupon of 4.125% and an initial conversion premium of 25%.

Price talk was for a coupon of 3.875% to 4.375% and an initial conversion premium of 25% to 30%.

Barclays, J.P. Morgan Securities LLC, BofA Securities Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were bookrunners for the Rule 144A offering.

The notes are non-callable. They are putable upon a fundamental change.

There is dividend protection via a conversion rate adjustment above $1.005 per quarter.

The notes will be settled in cash up to the principal amount with any remaining amount to be settled in cash, shares or a combination of both at the company’s option.

With the greenshoe exercised in full, Duke’s net proceeds will be $1.698 billion and will be used to repay a portion of the company’s commercial paper and for general corporate purposes.

Duke Energy is a Charlotte, N.C.-based electric and natural gas utility company.

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