Dominion Energy Announces Redemption of 2014 Series A Enhanced Junior Subordinated Notes

Rhea-AI Summary

Dominion Energy (NYSE: D) has announced the redemption of its outstanding 2014 Series A Enhanced Junior Subordinated Notes due 2054 on October 8, 2024. The $685 million in notes will be redeemed at 100% of the principal amount plus accrued interest. This follows the company's $2 billion issuance of enhanced junior subordinated notes in May 2024, which exceeded its 2024 hybrid financing guidance by $500 million. The redemption aligns with Dominion Energy's strategy to optimize its debt portfolio and doesn't change its financing guidance. The interest rate for the redemption will be based on the Three-Month CME Term SOFR plus a 0.26161% spread, replacing the previous LIBOR-based rate.

Positive

• Redemption of $685 million in notes at par value, potentially improving debt structure
• Successful issuance of $2 billion in enhanced junior subordinated notes in May 2024
• Exceeded 2024 hybrid financing guidance by $500 million, indicating strong market demand
• No change to company's financing guidance, suggesting stable financial planning

Negative

• None.

Financial Analyst

Dominion Energy's redemption of $685 million in 2014 Series A Enhanced Junior Subordinated Notes is a strategic financial move. This action, funded by a $2 billion issuance of new notes in May 2024, demonstrates the company's proactive debt management. The redemption at par value suggests favorable market conditions and strong financial positioning. Importantly, this transaction doesn't alter Dominion's financing guidance, indicating it's within their planned financial strategy. The shift from LIBOR to SOFR for interest rate calculation aligns with broader market trends, potentially reducing future interest rate risks. Overall, this refinancing could lead to improved debt structure and potentially lower interest expenses, which may positively impact the company's financial health in the long term.

Market Research Analyst

Dominion Energy's debt restructuring reflects a broader trend in the utility sector towards optimizing capital structures in a changing interest rate environment. The company's ability to issue $2 billion in new notes, 25% above their 2024 hybrid financing guidance, suggests strong investor confidence in Dominion's credit quality. This move could potentially lower the company's overall cost of capital, enhancing its competitive position. The transition from LIBOR to SOFR aligns with industry-wide changes, demonstrating Dominion's adaptability to evolving financial markets. Investors should note that while this refinancing doesn't directly impact earnings, it could improve financial flexibility and support future growth initiatives, potentially benefiting shareholders in the long run.

RICHMOND, Va., Sept. 18, 2024 /PRNewswire/ -- Dominion Energy, Inc. (NYSE: D), announced today that it will redeem for cash all of its outstanding 2014 Series A Enhanced Junior Subordinated Notes due 2054 (the Notes) on Oct. 8, 2024 (the Redemption Date), at a price of 100% of the principal amount of the Notes, plus accrued and unpaid interest through, but not including, the Redemption Date. The total principal amount of the Notes outstanding is $685 million.

As previously announced, in May 2024, Dominion Energy issued $2 billion of enhanced junior subordinated notes in two series of $1 billion each maturing in 2054 and 2055, respectively, which represented $500 million in excess of the company's 2024 hybrid financing guidance. The use of proceeds from that offering was to finance the company's previously completed cash tender offer for shares of its Series B preferred stock; repay short-term debt; and opportunistically retire, redeem, or repurchase other outstanding securities, including the Notes, which become callable at par in October 2024. There is no change to the company's financing guidance.

On the Redemption Date, assuming the series trustee for the Notes has received sufficient funds to complete the redemption, the Notes will become due and payable and interest will cease to accrue.

For purposes of calculating the amount of accrued and unpaid interest payable in connection with the redemption, the interest rate for the Notes from Oct. 1, 2024, through the Redemption Date will be determined by reference to Three-Month CME Term SOFR plus a tenor spread adjustment of 0.26161% per annum (the Replacement Reference Rate). The Replacement Reference Rate has replaced the Three-Month LIBOR Rate as the reference rate for the Notes as stipulated by the Adjustable Interest Rate (LIBOR) Act and related regulations issued by the Board of Governors of the Federal Reserve System.

As provided in the LIBOR Act and related regulations, certain conforming changes to the terms of the Notes have been made by operation of law to reflect the transition from the Three-Month LIBOR Rate to the Replacement Reference Rate. 

The series trustee and paying agent for the Notes is Deutsche Bank Trust Company Americas, c/o DB Services Americas, Inc., 5022 Gate Parkway, Suite 200, Jacksonville, Florida, 32256.

This press release does not constitute a notice of redemption under the indenture governing the Notes.  Dominion Energy will issue a separate notice of redemption in accordance with the terms of the indenture governing the Notes, which may include additional information concerning the redemption.

About Dominion Energy
More than 4.5 million customers in 13 states energize their homes and businesses with electricity or natural gas from Dominion Energy (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 that are subject to a variety of factors that could cause actual events or results to differ from those included in these statements. These factors are identified in Dominion Energy's Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission. Dominion Energy refers readers to those discusses for further information. Any forward-looking statement speaks only as of the date on which it is made, and Dominion Energy undertakes no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date on which it is made.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/dominion-energy-announces-redemption-of-2014-series-a-enhanced-junior-subordinated-notes-302252342.html

SOURCE Dominion Energy

FAQ

When will Dominion Energy (D) redeem its 2014 Series A Enhanced Junior Subordinated Notes?

Dominion Energy will redeem the 2014 Series A Enhanced Junior Subordinated Notes on October 8, 2024.

What is the total principal amount of Dominion Energy's (D) 2014 Series A Notes being redeemed?

The total principal amount of the 2014 Series A Notes being redeemed is $685 million.

How much did Dominion Energy (D) raise in enhanced junior subordinated notes in May 2024?

Dominion Energy issued $2 billion of enhanced junior subordinated notes in May 2024.

What will replace LIBOR as the reference rate for Dominion Energy's (D) 2014 Series A Notes?

The Three-Month CME Term SOFR plus a tenor spread adjustment of 0.26161% per annum will replace LIBOR as the reference rate.