Xcel Energy plans to raise $2 billion through convertible senior notes due in 2027, with an option to sell up to another $300 million. The proposed private offering is subject to market conditions, and its final terms have not been set.
The utility expects to use the proceeds mainly to repay short-term borrowings, including commercial paper and part of a 364-day term loan, as well as for general corporate purposes.
- Potential size: The offering is for $2 billion in principal, with an option for purchasers to buy up to $300 million more. The option can be exercised during the 13 days beginning on the notes’ initial issue date.
- Use of proceeds: Xcel expects to pay down some short-term debt and use any remaining proceeds for general corporate purposes.
- Terms still pending: The interest rate, initial conversion price and other key terms will be determined when the notes are priced. Interest will be paid twice a year.
- Conversion and settlement: Holders may convert the notes under specified conditions and during specified periods. Xcel would pay cash up to the principal amount being converted; for any conversion value above principal, it can choose to pay cash, deliver shares or use a combination.
- Offering format: The notes are being offered privately to institutional buyers and are not expected to be registered for public sale.
The transaction would replace some short-term borrowings with notes due in 2027. If holders convert and Xcel uses shares to settle any value above the principal amount, the conversion could result in some share dilution; the final conversion price and settlement terms are not yet known.