NextEra Energy, Inc. (NYSE: NEE) has announced an agreement to sell $1.5 billion in equity units to J.P. Morgan, Mizuho, and Goldman Sachs & Co. LLC, with the transaction expected to close on Oct. 31, 2024.
The sale is anticipated to generate approximately $1.45 billion in net proceeds after deducting underwriting discounts and other expenses. These funds will be allocated to NextEra Energy Capital Holdings for investments in energy and power projects, as well as for general corporate purposes, including repaying part of its outstanding commercial paper obligations.
Each equity unit will be priced at $50 and will include a contract to purchase NextEra Energy common stock in the future, along with a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings debenture due Nov. 1, 2029, valued at $1,000. These debentures will be guaranteed by NextEra Energy, Inc. The total annual distributions on the equity units will be 7.234%, covering interest on the debentures and payments under the stock purchase contracts.
In approximately three years, holders of the equity units will need to purchase NextEra Energy common stock for cash, with prices ranging from $82.87 to $103.58 per share. The higher end of this range reflects a 25% premium over NextEra’s closing stock price of $82.87 on Oct. 28, 2024. The stock purchase must be completed by Nov. 1, 2027, with the purchase price determined by NextEra’s stock performance over the 20 trading days leading up to Oct. 27, 2027. Holders can fulfill their purchase obligations using proceeds from remarketing the debentures.
Upon settlement of the purchase contracts, NextEra Energy will receive cash and issue the corresponding number of shares of common stock. The purchase contracts will be accounted for in NextEra Energy’s diluted earnings per share calculations prior to stock issuance.
