Southern Company (NYSE: SO) has announced an offering of $1.25 billion in aggregate principal amount of its convertible senior notes due June 15, 2028. This offering is made to qualified institutional buyers pursuant to rule 144A under the Securities Act of 1933.
The convertible notes will be senior, unsecured obligations of Southern Company and will pay interest semiannually. They will mature on June 15, 2028, and prior to March 15, 2028, will be convertible only upon the occurrence of certain events and during certain periods. Thereafter, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Upon conversion, Southern Company will pay cash up to the aggregate principal amount of the convertible notes to be converted and pay or deliver cash, shares of Southern Company’s common stock, or a combination of cash and shares of common stock, at Southern Company’s election, in respect of the remainder, if any, of Southern Company’s conversion obligation in excess of the aggregate principal amount of the convertible notes being converted.
The company intends to use a portion of the net proceeds from this offering to repurchase a portion of its series 2023a 3.875% convertible senior notes due December 15, 2025 and its series 2024a 4.50% convertible senior notes due June 15, 2027, through individually negotiated transactions with a limited number of holders thereof. The remaining net proceeds are expected to be used to repay all or a portion of its outstanding commercial paper borrowings and for other general corporate purposes, which may include investment in its subsidiaries.
Contemporaneously with the pricing of the convertible notes, Southern Company expects to enter into one or more separate and privately negotiated transactions with a limited number of holders of the existing convertible notes to use a portion of the proceeds of the offering to repurchase a portion of the existing convertible notes on terms to be negotiated with each such holder.
Southern Company expects that holders of the existing convertible notes that sell their existing convertible notes to Southern Company in any note repurchase transaction may enter into or unwind various derivatives with respect to Southern Company’s common stock and/or purchase or sell shares of Southern Company’s common stock in the market to hedge their exposure in connection with these transactions.
The offer and sale of the convertible notes and the shares of common stock issuable upon conversion of the convertible notes have not been registered under the securities laws of any jurisdiction, and may not be offered or sold without registration or an applicable exemption from registration requirements.
Southern Company (NYSE: SO) is a leading energy provider serving 9 million customers across the Southeast and beyond through its family of companies, including electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company, a leading distributed energy distribution company with national capabilities, a fiber optics network, and telecommunications services. The market has reacted to these announcements by moving the company's shares 0.87% to a price of $89.48. For the full picture, make sure to review SOUTHERN CO's 8-K report.
