NextEra Energy, Inc. (NYSE: NEE) announced that it intends to sell $1.5 billion of equity units.
The net proceeds from the sale of the equity units, which are expected to be approximately $1.45 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 a portion of its outstanding commercial paper obligations.
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 Nov. 1, 2029, to be issued in the principal amount of $1,000. The debentures will be guaranteed by NextEra Energy Capital Holdings' parent company, NextEra Energy, Inc.
In approximately three years, the equity unit holders will be required to purchase NextEra Energy common stock for cash, based on a range of a 0% to 25% premium over the New York Stock Exchange closing price of NextEra Energy common stock on Oct. 28, 2024. The holders of the equity units must complete the stock purchase by no later than Nov. 1, 2027, with the required purchase price of stock purchased on that date determined based on NextEra Energy's common stock over the 20 consecutive trading day period ending on Oct. 27, 2027. The holders may satisfy their purchase obligations with proceeds raised from remarketing the debentures that comprise part of their equity units.
Upon settlement of the purchase contract, NextEra Energy will receive cash and will issue the requisite number of shares of its common stock. Before the issuance of NextEra Energy common stock upon settlement of the purchase contracts, the purchase contracts will be reflected in NextEra Energy's diluted earnings per share calculations using the treasury stock method.
