By Abigail W. Adams
Portland, Me., Jan. 5 – Sempra Energy priced $1.5 billion of series A mandatory convertible preferred stock after the close on Thursday at the rich end of talk with a 6% dividend and an initial conversion premium of 22.5%, according to an FWP filing with the Securities and Exchange Commission.
The deal came at the rich end of talk for a dividend of 6% to 6.5% and an initial conversion premium of 17.5% to 22.5%.
The threshold appreciation price is $131.075.
The preferreds will convert into a variable number of shares on the mandatory conversion date of Jan. 15, 2021. The conversion rate will be no less than 0.7629 and no more than 0.9345, according to the deal’s prospectus.
The conversion rate will be determined based on the average volume-weighted average price of Sempra’s common stock over the 20-trading day period commencing on and including the 21st scheduled trading day prior to Jan. 15, 2021, the company said in a news release.
A simultaneous offering of 23,364,486 shares of common stock was priced at $107 per share.
The convertible offering has a $225 million greenshoe and the stock offering has a greenshoe for 3,504,672 share.
Dividends may be paid in cash, stock or a combination, at Sempra’s option.
Morgan Stanley, RBC Capital Markets and Barclays are joint bookrunners for both registered offerings.
Proceeds from the offerings will be used to help finance the pending acquisition of Energy Future Holdings Corp., which will include Energy Future Holdings Corp.’s indirect 80% ownership of Oncor Electric Delivery Company LLC.
If the acquisition is not completed by Dec. 1, 2018, Sempra may choose to redeem the mandatory convertible preferred stock. The mandatory convertible preferred stock may be redeemed in cash, or cash and shares if Sempra stock exceeds the initial price for 10 consecutive trading days before the notice of redemption, according to the preliminary prospectus.
There is takeover protection.
Sempra is a San Diego-based electricity and natural gas utility and infrastructure company.
| Issuer: | Sempra Energy
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| Issue: | Series A mandatory convertible preferred stock
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| Amount: | $1.5 billion
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| Overallotment option: | $225 million
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| Maturity: | Jan. 15, 2021
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| Dividend: | 6%
|
| Price: | Par of $100
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| Conversion premium: | 22.5%
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| Conversion price: | $131.075, at maturity $131.075 to $107.00
|
| Conversion rate: | 0.7629, at maturity 0.7629 to 0.9345
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| Call options: | Non-callable
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| Put options: | None
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| Bookrunners: | Morgan Stanley, RBC Capital Markets and Barclays
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| Co-managers: | BBVA Securities Inc., HSBC Securities (USA) Inc., Santander Investment Securities Inc., SG Americas Securities, LLC
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| Distribution: | Off shelf
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| Pricing date: | Jan. 4
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| Settlement date: | Jan. 9
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| Listing: | NYSE: SREPrA
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| Stock symbol: | NYSE: SRE
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| Stock reference price: | $107.00 in concurrent equity offering
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| Market capitalization: | $27.2 billion
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| Talk: | 6% to 6.5%, up 17.5% to 22.5%
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