Duke Energy Corporation announced on Mar. 9 its intention to offer $1 billion in aggregate principal amount of convertible senior notes due 2029 through a private placement under the Securities Act of 1933. The company also plans to grant initial purchasers an option to buy up to an additional $150 million in notes within a 13-day period from the issuance date.
The proposed offering is significant as it aims to help Duke Energy manage its debt obligations and support general corporate purposes. The net proceeds are intended for repaying at maturity $1.725 billion of outstanding 4.125% Convertible Senior Notes due April 15, 2026, including any cash amounts due upon conversion, as well as for other corporate needs.
According to the announcement, the new convertible notes will be direct, unsecured, and unsubordinated obligations of Duke Energy. Holders may convert their notes under certain conditions and during specified periods. Interest will be paid semiannually in arrears. Upon conversion, Duke Energy will pay cash up to the principal amount being converted and may settle any excess with cash, shares of common stock, or a combination thereof at its discretion.
The company noted that many holders of the existing convertible notes use a convertible arbitrage strategy involving short positions in Duke Energy’s common stock. These positions may be closed around the maturity date through purchases or derivatives transactions related to Duke Energy’s stock, potentially affecting its market price during that period.
The offering is limited to qualified institutional buyers under Rule 144A and will be made only by private memorandum. The securities have not been registered under federal or state laws and cannot be offered or sold without proper exemption or registration.
Duke Energy cautioned that this news release does not constitute an offer to sell or solicit an offer to buy these securities where such actions would be unlawful prior to registration or qualification.
