OGE Energy has opened a program to sell up to $750 million of its common stock over time, giving the utility flexibility to raise equity when it considers market conditions and its funding needs favorable. The program can use direct share sales or forward-sale arrangements with a group of banks.
The company is not committed to sell any shares, and it can pause or end the program. If it does sell shares, existing shareholders could be diluted.
Key details
- No fixed sale schedule: OGE will decide when and how much to sell, taking into account factors such as its share price, market conditions and other funding sources. The banks are not required to sell a specified amount.
- Several ways to sell: Shares may be sold through regular market transactions, block trades or privately negotiated transactions, at market-related or negotiated prices.
- Forward sales may not provide immediate cash: In a forward transaction, a bank or affiliate borrows OGE shares and sells them into the market. OGE receives no proceeds from that initial sale.
- Settlement determines what OGE receives: OGE expects generally to settle forward transactions by delivering shares later and receiving cash at the agreed forward price. It may instead choose cash or net-share settlement; in those cases, it may receive no proceeds and could owe cash or shares to the bank.
- Bank compensation and existing ties: The banks will receive compensation for their work. Some have affiliates that lend to OGE under its credit facilities. If OGE uses offering proceeds to repay borrowings under those facilities, those lenders would receive their share of the repayments.
Plain-English implications
The program gives OGE a flexible route to raise equity, but the amount and timing of any capital raised are not predetermined. Direct sales would add shares to the market; forward sales also involve shares being sold before OGE receives any cash, with the eventual outcome depending on how the company settles each transaction.