Duke Energy Corporation announced on Mar. 10 the pricing of its offering of $1.3 billion aggregate principal amount of 3.000% convertible senior notes due 2029 in a private placement under the Securities Act of 1933. The company increased the size of the offering from the previously announced $1 billion and granted initial purchasers an option to buy up to an additional $200 million within a 13-day period beginning on the issuance date. The sale is expected to close on March 12, subject to customary closing conditions.
The proceeds from this offering are expected to be approximately $1.29 billion, or up to $1.48 billion if the option for additional notes is fully exercised, after deducting discounts and expenses. Duke Energy said it intends to use these funds primarily to repay at maturity its outstanding $1.725 billion aggregate principal amount of existing 4.125% Convertible Senior Notes due April 15, 2026, as well as for general corporate purposes.
The new convertible notes will mature on March 15, 2029, unless converted or repurchased earlier according to their terms, and will bear interest at a fixed rate of 3% per year, payable semiannually starting September 15, 2026. Holders may convert their notes under certain conditions before December 15, 2028; after that date and until shortly before maturity, conversion can occur at any time at the prevailing rate.
Conversions will be settled by Duke Energy through cash payments up to the principal amount and either cash, shares of common stock, or a combination for any excess obligation. The initial conversion rate is set at approximately six shares per $1,000 principal amount (equivalent to a conversion price around $160 per share), representing a premium over Duke Energy’s last reported share price on March 9.
If Duke Energy undergoes a fundamental change as defined in the indenture governing these notes, holders may require repurchase at par plus accrued interest; certain changes could also trigger an increase in the conversion rate for affected conversions. The company noted that activity related to arbitrage strategies by current noteholders could affect its stock price during observation periods associated with maturing debt.
This private offering targets qualified institutional buyers under Rule 144A and is not registered under U.S. securities laws; thus it cannot be offered or sold publicly without proper registration or exemption.
Duke Energy is one of America’s largest energy holding companies with electric utilities serving millions across several states and natural gas utilities serving customers in four states.
