By Abigail W. Adams
Portland, Me., July 11 – Sempra Energy priced $500 million three-year par of $100 series B mandatory convertible preferred stock before the market open on Wednesday at the midpoint of talk with a coupon of 6.75% and an initial conversion premium of 20%, according to an FWP filing with the Securities and Exchange Commission.
Price talk was for a dividend of 6.5% to 7% and an initial conversion premium of 17.5% to 22.5%, according to a market source.
Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC were the joint bookrunners for the registered offering, which carries a greenshoe of $75 million.
The preferred stock priced concurrently with $1.1 billion, or 9.75 million shares, of common stock at a public offering price of $113.75.
The common shares were sold to forward purchasers as part of a forward sales agreement with the initial forward sales price $111.873125 per share.
The concurrent offering has a greenshoe of $165 million, or 1,462,500 shares of common stock, which may be purchased directly from the company.
The series B preferred stock will be mandatorily convertible on July 15, 2021 at a conversion rate no less than 0.7326 shares if stock is greater than the $136.50 threshold appreciation price and no greater than 0.8791 if stock is less than the initial price of $113.75.
The forward sales agreements will settle on or prior to Dec. 15, 2019.
Holders may convert the mandatory convertible preferred stock at any time prior to maturity at the minimum conversion rate of 0.7326.
Holders will be able to convert the series B mandatory convertible preferred stock at the fundamental change conversion rate upon a change of control.
The series B preferred stock will be listed on the New York Stock Exchange under the ticker “SREPrB.”
Net proceeds from the convertible preferred stock offering are expected to be $491.8 million, or $565.5 million if the greenshoe is exercised in full.
Proceeds from the common share offering are expected to be $1.091 billion at the termination of the forward sales agreement or $1.254 billion if the greenshoe is exercised in full.
Proceeds will be used to repay outstanding commercial paper, for working capital and for general corporate purposes.
Sempra Energy is a San Diego-based natural gas utilities holding company.
| Issuer: | Sempra Energy
|
| Securities: | Series B mandatory convertible preferred stock
|
| Amount: | $500 million or 5 million shares
|
| Greenshoe: | $75 million or 750,000 shares
|
| Maturity: | July 15, 2021
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| Bookrunners: | Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC
|
| Co-managers: | BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc., Mizuho Securities USA LLC, MUFG, UBS Securities LLC
|
| Dividend: | 6.75%
|
| Price: | Par of $100
|
| Yield: | 6.75%
|
| Conversion premium: | 20%
|
| Threshold appreciation price: | $136.50
|
| Conversion rate: | 0.8791 if stock is below $113.75, 0.7326 if stock is above $136.50
|
| Concurrent offering | $1.1 billion, or 9.75 million shares of common stock at $113.75
|
| Pricing date: | July 11
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| Settlement date: | July 13
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| Talk: | Dividend of 6.5% to 7% and an initial conversion premium of 17.5% to 22.5%
|
| Stock symbol: | NYSE: SREPrB; NYSE: SRE
|
| Stock price: | $113.75 in concurrent offering
|
| Market capitalization: | $30.54 billion
|
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