Source: Sempra Energy
July 10, 2018 (San Diego) – Sempra Energy (NYSE: SRE) today announced that it is commencing concurrent offerings (the equity offerings) of $1.1 billion of shares of its common stock in connection with the forward sale agreements described below (from Sempra’s press release) and $500 million of shares of its Mandatory Convertible Preferred Stock, Series B, each in a separate registered public offering, subject to market and other conditions.
These offerings are being made by means of separate preliminary prospectus supplements and are not contingent on each other. Sempra Energy expects to use the net proceeds from these offerings and the related sale of shares of its common stock pursuant to the forward sale agreements referred to below to repay outstanding commercial paper, to fund working capital and for other general corporate purposes.
Sempra Energy intends to grant the underwriters in the respective equity offerings the option to purchase directly from Sempra Energy up to an additional $165 million of shares of its common stock and up to an additional $75 million of shares of the Mandatory Convertible Preferred Stock.
Citigroup and J.P. Morgan are acting as joint bookrunners of the equity offerings and representatives of the underwriters.
In connection with the common stock offering, Sempra Energy expects to enter into forward sale agreements with an affiliate of Citigroup and an affiliate of J.P. Morgan (in such capacity, the forward purchasers) with respect to $1.1 billion of shares of its common stock. In connection with the forward sale agreements, the forward purchasers or their respective affiliates (in such capacity, the forward sellers) are expected to borrow from third parties and sell to the underwriters of the common stock offering for resale by such underwriters in such offering an aggregate of $1.1 billion of shares of the common stock. If, however, the forward purchasers determine in good faith, after using commercially reasonable efforts, that the forward sellers are unable to borrow and deliver to the underwriters any such shares of common stock, or that the forward sellers are unable to borrow, at a stock loan rate not greater than a specified rate, and deliver to the underwriters any such shares, or if the forward sellers elect not to borrow such shares of common stock because specified conditions are not satisfied, Sempra Energy will issue and sell to the underwriters a number of shares of common stock equal to the number of shares that the forward sellers did not borrow and deliver.
Sempra Energy will not initially receive any proceeds from the sale of common stock sold by the forward sellers to the underwriters. Instead, subject to its right to elect cash settlement or net share settlement subject to certain conditions, Sempra Energy intends to deliver, upon physical settlement of such forward sale agreements on one or more dates specified by Sempra Energy occurring no later than December 15, 2019, an aggregate number of shares of its common stock to the forward purchasers equal to the number of shares sold by the forward sellers in the common stock offering, in exchange for cash proceeds per share equal to the applicable forward sale price per share, which will initially be equal to the public offering price per share in the common stock offering less underwriting discounts and commissions. The initial forward sale price is subject to subsequent adjustment from time to time as provided in the forward sale agreements.
Each share of Mandatory Convertible Preferred Stock is expected to have a liquidation preference of $100 per share.
Unless earlier converted, each share of Mandatory Convertible Preferred Stock will automatically convert into a variable number of shares of Sempra Energy’s common stock on the mandatory conversion date, which is expected to be July 15, 2021. The number of shares of Sempra Energy’s common stock issuable on mandatory conversion will be determined based on the average volume-weighted average price of Sempra Energy’s common stock over the 20-trading day period commencing on and including the 21st scheduled trading day prior to July 15, 2021. The dividend rate and the conversion terms of the Mandatory Convertible Preferred Stock will be determined by negotiations among Sempra Energy and the underwriters.
The offerings are being made pursuant to an effective shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC). Each offering will be made only by means of a prospectus supplement relating to such offering and the accompanying base prospectus, copies of which may be obtained by contacting the representatives of the underwriters using the information provided below under “Underwriter Contact Information.” An electronic copy of each preliminary prospectus supplement, together with the accompanying prospectus, also is available on the SEC’s website, www.sec.gov.