Dominion Energy Announces Expiration and Final Results of Cash Tender Offer to Purchase Any and All of Its Outstanding Series B Preferred Stock

Rhea-AI Summary

Dominion Energy announced the expiration and final results of its tender offer to purchase its outstanding 4.65% Series B Preferred Stock. The offer expired on June 4, 2024, with 439,590 shares validly tendered, representing $439,590,000 in aggregate liquidation preference. The company accepted all tendered shares for an aggregate cost of $438,491,025, excluding accrued dividends and fees. This represents approximately 55% of the total issued shares. Following the tender offer, 360,410 shares, worth $360,410,000, remain outstanding. The company plans to settle on June 6, 2024. Barclays, J.P. Morgan, and Mizuho Securities acted as dealer managers; D.F. King & Co. was the tender and information agent.

Positive

• Successful tender offer completion with 55% of Series B Preferred Stock tendered.
• Aggregate cost of $438,491,025 for accepted shares, excluding fees and dividends.
• Settlement expected on June 6, 2024, indicating prompt payment and resolution.
• Barclays, J.P. Morgan, and Mizuho Securities as dealer managers, indicating reputable management.

Negative

• 439,590 shares tendered out of total outstanding, potentially indicating mixed investor sentiment.
• Remaining 360,410 shares worth $360,410,000 indicate substantial remaining obligations.
• Cost of tender offer may impact cash flow and financial reserves.

Insights

Financial Analyst

Dominion Energy's tender offer to purchase its Series B Preferred Stock is noteworthy for several reasons. A $438.5 million expenditure represents a significant use of cash resources, especially given the series' 4.65% fixed-rate reset. By reducing the number of preferred shares, Dominion is potentially decreasing its future dividend obligations, which could positively impact cash flow in future periods.

From a balance sheet perspective, this move could enhance the company's financial flexibility and reduce leverage, assuming the repurchased shares are retired and not reissued. The remaining 360,410 preferred shares will continue to weigh on the company’s financials, but the 55% reduction is substantial. It's important for investors to monitor how Dominion plans to allocate the savings from reduced dividend payouts and whether these will be reinvested into growth initiatives or used to return value to shareholders in other forms.

Short-term, the tender offer's immediate impact may not be overwhelmingly positive as it involves a significant cash outflow. Long-term, however, the reduced dividend obligations and potential balance sheet improvements could create a more stable financial footing for the company, enhancing its capacity for strategic investments and increasing overall shareholder value.

Market Research Analyst

From a market perspective, Dominion's tender offer reflects a strategic move to manage its capital structure and optimize stockholder value. The tender offer price of $997.50 per share, slightly below the $1,000 liquidation preference, suggests a calculated approach to minimizing costs. This might indicate Dominion's confidence in its liquidity position and its forward-looking capital allocation strategies.

Such actions can often signal company strength and commitment to improving financial metrics, which may be interpreted positively by the market. This could potentially stabilize or even elevate stock prices as investors gain confidence in the company’s fiscal prudence and management’s ability to handle debt and equity instruments effectively.

For retail investors, understanding the mechanics of such a tender offer and its implications on dividend yield and stock price volatility is crucial. They should consider how the reduction in preferred shares might impact their own investment returns, especially in terms of dividend income and stock price appreciation over time.

RICHMOND, Va., June 5, 2024 /PRNewswire/ -- Dominion Energy, Inc. (NYSE: D), today announced the expiration and final results of its previously announced tender offer (the Offer) to purchase for cash any and all of its outstanding 4.65% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, without par value, with a $1,000 liquidation preference per share (Series B Preferred Shares), at a purchase price of $997.50 per share, plus Accrued Dividends (as defined below).

The Offer expired one minute after 11:59 P.M., New York City time, on June 4, 2024 (such time and date, the Expiration Date). Based on the final count by the tender agent for the Offer, as of the Expiration Date, 439,590 Series B Preferred Shares (representing $439,590,000 million in aggregate liquidation preference) were validly tendered and not validly withdrawn pursuant to the Offer. In accordance with the terms of the Offer, the company has accepted for purchase all such Series B Preferred Shares for an aggregate cost of $438,491,025, excluding Accrued Dividends and fees and expenses relating to the Offer. The Series B Preferred Shares validly tendered and not validly withdrawn and accepted for purchase in the Offer represent approximately 55.0% of the total number of Series B Preferred Shares issued and outstanding as of the Expiration Date. Following completion of the Offer, 360,410 Series B Preferred Shares (representing $360,410,000 million in aggregate liquidation preference) will remain outstanding.

All conditions to the Offer were deemed satisfied or waived by the company prior to the Expiration Date. The company expects to pay the aggregate purchase price for all Series B Preferred Shares accepted for purchase in the Offer on June 6, 2024 (the Settlement Date).

As used in connection with the Offer, "Accrued Dividends" means, for each $1,000 liquidation preference of the Series B Preferred Shares, accrued and unpaid dividends from and including December 15, 2023 (which is the most recent dividend payment date with respect to such Series B Preferred Shares), up to, but not including, the Settlement Date, assuming for the purposes of the Offer that a dividend for such Series B Preferred Shares had in fact been declared during such period.

Barclays Capital Inc., J.P. Morgan Securities LLC and Mizuho Securities USA LLC acted as dealer managers for the Offer. D.F. King & Co. acted as tender agent and information agent for the Offer.

About Dominion Energy

More than 4.5 million customers in 13 states energize their homes and businesses with electricity or natural gas from the company (NYSE: D), headquartered in Richmond, Va. The company is committed to providing reliable, affordable, and increasingly clean energy every day and to achieving Net Zero emissions by 2050. Please visit DominionEnergy.com to learn more.

Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company. The statements relate to, among other things, expectations concerning the settlement of the Offer, which are subject to various risks and uncertainties. Other risk factors relating to the company's business more generally are detailed from time to time in the company's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC. These forward-looking statements speak only as of the date of this Form 8-K. The company assumes no obligation to provide any revisions to, or update, any projections and forward-looking statements contained in this release.

 

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SOURCE Dominion Energy

FAQ

What is the result of Dominion Energy's tender offer for its Series B Preferred Stock?

Dominion Energy successfully tendered 439,590 Series B Preferred Shares, costing $438,491,025.

How many Series B Preferred Shares remain outstanding after Dominion Energy's tender offer?

After the tender offer, 360,410 Series B Preferred Shares remain outstanding.

When did Dominion Energy's tender offer for Series B Preferred Stock expire?

The tender offer expired on June 4, 2024.

What was the purchase price for each Series B Preferred Share in Dominion Energy's tender offer?

The purchase price was $997.50 per share, plus accrued dividends.

Which companies acted as dealer managers for Dominion Energy's tender offer?

Barclays, J.P. Morgan, and Mizuho Securities acted as dealer managers.

When is the settlement date for Dominion Energy's tender offer for Series B Preferred Shares?

The settlement date is expected to be June 6, 2024.