NextEra Energy plans to sell $1.45 billion of equity units to help fund its $18.4 billion acquisition of Oncor Electric Delivery from Energy Future Holdings.
Each unit will require the holder to purchase NextEra Energy common stock for cash, based on a per-share price range of $127.63 to $159.54 which, at the higher end of that range, reflects a 25% premium to NextEra’s stock price on Aug. 2, 2016.
NextEra says the net proceeds from the sale of the units will contribute to general funds it expect to use to finance the Oncor acquisition, as well as for other general corporate purposes, including the repayment of a portion of NextEra’s outstanding commercial paper obligations and other debts.
Two weeks after NextEra Energy failed in its attempt to buy Hawaiian Electric Industries, the company turned around and won the bidding for Oncor, the distribution utility business of bankrupt Energy Future Holdings.
Oncor, which provides power to more than 10 million consumers in Northeast and West Texas, has been up for sale since Energy Future Holdings entered bankruptcy in 2014.
Some analysts pegged NextEra as a leader to buy Oncor last summer, but it was upstaged by energy and real estate holding company Hunt Consolidated. Hunt sought to convert Oncor to a Real Estate Investment Trust, a tax-saving move never tried on a utility of its size.
Texas regultors approved the proposal, but Hunt balked at provisions to help ensure savings were split with customers. It withdrew its merger bid a day before regulators were set to vote on a rehearing, opening the door for NextEra.
NextEra’s Oncor acquisition must still win bankruptcy court approval, as well as approvals from Texas utility regulators, the Federal Energy Regulatory Commission, and the expiration or termination of the waiting period under the Hart-Scott-Rodino Act.