American Electric Power (NYSE: AEP) announced that it has priced its offering of 14 million equity units or $700 million stated amount. The transaction is expected to close March 19, 2019, subject to customary closing conditions.
Each equity unit will be issued in a stated amount of $50 and will consist of a contract to purchase AEP common stock in 2022 and a 1/20 undivided beneficial ownership interest in an AEP junior subordinated debenture due 2024 to be issued in the principal amount of $1,000. Total annual distributions on the equity units will be at the rate of 6.125 percent, consisting of interest on the junior subordinated debentures and payments under the stock purchase contracts. The threshold appreciation price for the equity units is $99.58 per share, which represents a premium of approximately 20 percent over the reference price. Under the purchase contract, holders will be required to purchase a variable number of shares of AEP stock no later than March 15, 2022.
AEP has granted the underwriters an option to purchase during the 13-day period beginning on, and including, the initial issuance date of the equity units up to 2.1 million additional equity units, or an additional aggregate stated amount of $105 million.
AEP intends to use the net proceeds from the sale of the equity units, which are projected to be $682 million (after deducting the underwriting discount and other offering expenses and without giving effect to the option described above) to help fund the company’s overall capital expenditure plans, including the recently announced contracted renewables portfolio, and to address planned equity needs in connection with the company’s existing capital expenditure plans through 2021, exclusive of the dividend reinvestment plan.
Barclays, Morgan Stanley and Wells Fargo Securities are joint book-running managers for the offering.
The offering is being made under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such jurisdiction. The offer may be made only by means of a prospectus and the related prospectus supplement. Copies of these documents may be obtained by contacting Barclays Capital Inc. by calling 888-603-5847, or by mail at Barclays Capital Inc. c/o Broadridge Financial Solutions, 1155 Long Island Ave., Edgewood, New York 11717, or by email at Barclaysprospectus@broadridge.com; Morgan Stanley & Co. LLC by mail at Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, New York 10014; or Wells Fargo Securities, LLC, 375 Park Avenue, 4th Floor, New York, New York 10152, Attention: Equity Syndicate Department, by telephone at 800-326-5897 or by email at firstname.lastname@example.org.
American Electric Power, based in Columbus, Ohio, is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to our customers. AEP’s approximately 18,000 employees operate and maintain the nation’s largest electricity transmission system and nearly 220,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million regulated customers in 11 states. AEP also is one of the nation’s largest electricity producers with approximately 32,000 megawatts of diverse generating capacity, including more than 4,300 megawatts of renewable energy. AEP’s family of companies includes utilities AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, AEP Energy Partners, AEP OnSite Partners, and AEP Renewables, which provide innovative competitive energy solutions nationwide.