Entergy Corporation announces public offering of common stock with a forward component

Rhea-AI Summary

Entergy (NYSE: ETR) has announced a registered underwritten offering of $1.3 billion of common stock shares with a forward sale component. The company has partnered with Morgan Stanley, BofA Securities, J.P. Morgan, and Mizuho as joint book-running managers.

The offering includes forward sale agreements with the counterparties, where Entergy will issue and sell shares at an initial forward sale price equal to the underwriters' purchase price. Underwriters have a 30-day option to purchase up to an additional $195 million of shares to cover over-allotments.

Settlement is expected by September 30, 2026, with Entergy having the option for cash or net share settlement. The proceeds will be used for general corporate purposes, including potential repayment of commercial paper, revolving credit facility loans, or other debt.

Positive

• Flexible settlement options provide financial flexibility
• Additional $195 million over-allotment option available
• Potential debt reduction through proceeds

Negative

• Potential shareholder dilution from $1.3 billion stock offering
• Long settlement period extending to September 2026 creates uncertainty

Insights

Financial Analyst

Entergy's announcement of a $1.3 billion common stock offering with forward sale agreements represents a significant capital raising initiative, equivalent to approximately 7.1% of the company's current market capitalization. The structure of this transaction is particularly noteworthy as it provides Entergy with exceptional financial flexibility.

The forward component allows ETR to lock in current equity pricing while delaying actual share issuance until as late as September 2026. This strategic approach postpones potential earnings dilution while securing funding commitments today. The settlement flexibility (physical, cash, or net share settlement) gives management valuable optionality to optimize their capital structure based on future market conditions.

The stated use of proceeds for debt reduction indicates this offering is primarily focused on balance sheet management rather than specific growth initiatives. For a capital-intensive utility like Entergy, reducing leverage can improve credit metrics and potentially lower interest expenses. The participation of major financial institutions (Morgan Stanley, BofA Securities, J.P. Morgan, and Mizuho) as both underwriters and forward counterparties adds institutional credibility to the transaction.

While investors should consider the potential dilution impact if physically settled, the forward structure demonstrates sophisticated treasury management rather than urgent capital needs. The additional $195 million overallotment option provides further flexibility to capitalize on strong demand if it materializes.

Utility Strategy Expert

This forward-structured equity offering represents an increasingly common and sophisticated approach to capital management in the utility sector. The $1.3 billion raise with settlement flexibility through 2026 provides Entergy with an important strategic advantage in the capital-intensive utility business.

Forward sale agreements have gained popularity among utilities as they effectively bridge timing gaps between capital needs and optimal market conditions for share issuance. By securing the commitment now but delaying actual settlement, Entergy gains valuable optionality while maintaining certainty around future funding availability.

The focus on debt repayment aligns with prudent utility financial management. Regulated utilities must maintain appropriate debt-to-equity ratios to satisfy both regulators and credit rating agencies. This transaction appears designed to strengthen Entergy's financial foundation while preserving flexibility.

The settlement window extending to September 2026 is particularly valuable in the current interest rate environment, allowing management to time the actual impact on their capital structure. While the offering introduces potential dilution concerns, the strategic benefits of enhanced financial flexibility and improved debt metrics could offset these drawbacks. The transaction structure suggests deliberate long-term financial planning rather than a reactive capital raise, indicating confidence in the company's strategic direction.

NEW ORLEANS, March 17, 2025 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) announced today the commencement of a registered underwritten offering of $1,300,000,000 of shares of its common stock. Subject to certain conditions, all shares are expected to be borrowed by the forward counterparties (as defined below) (or their respective affiliates) from third parties and sold to the underwriters and offered in connection with the forward sale agreements described below. Morgan Stanley, BofA Securities, J.P. Morgan and Mizuho are acting as joint book-running managers for the offering.

In connection with the offering, Entergy expects to enter into forward sale agreements with each of Morgan Stanley & Co. LLC, Bank of America, N.A., JPMorgan Chase Bank, National Association and Mizuho Markets Americas LLC (with Mizuho Securities USA LLC acting as agent) (the "forward counterparties") under which Entergy will agree to issue and sell to the forward counterparties an aggregate of $1,300,000,000 of shares of its common stock at an initial forward sale price per share equal to the price per share at which the underwriters purchase the shares in the offering, subject to certain adjustments, upon physical settlement of the forward sale agreements. In addition, the underwriters of the offering expect to be granted a 30-day option to purchase up to an additional $195,000,000 of shares of Entergy's common stock upon the same terms, solely to cover any over-allotments. If the underwriters exercise their over-allotment option, Entergy expects to enter into additional forward sale agreements with the forward counterparties with respect to the additional shares.

Settlement of the forward sale agreements is expected to occur on or prior to September 30, 2026. Entergy may, subject to certain conditions, elect cash settlement or net share settlement for all or a portion of its rights or obligations under the forward sale agreements.

If Entergy elects physical settlement of the forward sale agreements, it expects to use the net proceeds for general corporate purposes, which may include repayment of commercial paper, outstanding loans under Entergy's revolving credit facility or other debt.

The offering is being made pursuant to Entergy's effective shelf registration statement filed with the U.S. Securities and Exchange Commission (the "SEC"). The preliminary prospectus supplement and the accompanying base prospectus related to the offering will be available on the SEC's website at www.sec.gov. Copies of the preliminary prospectus supplement and the accompanying base prospectus relating to the offering may be obtained from the joint-book running managers for the offering as follows:

Morgan Stanley & Co. LLC
180 Varick St, 2nd Floor
New York, New York 10014
Attn: Prospectus Department

BofA Securities, Inc.
NC1-022-02-25
201 North Tryon Street
Charlotte, NC  28255-0001
Attn: Prospectus Department
Email: dg.prospectus_requests@bofa.com

J.P. Morgan Securities LLC
c/o Broadridge Financial Solutions
1155 Long Island Avenue
Edgewood, NY 11717
Email: prospectus-eq_fi@jpmchase.com and
postsalemanualrequests@broadridge.com

Mizuho Securities USA LLC
1271 Avenue of the Americas 3rd Fl.,
New York, NY 10020
Attn: Equity Capital Markets

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which the offer, solicitation or sale of these securities would be unlawful prior to registration or qualification under the securities laws of any jurisdiction. The offering of these securities will be made only by means of a prospectus and a related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

About Entergy

Entergy Corporation is an integrated energy company engaged in electric power production, transmission and retail distribution operations. Entergy owns and leases a U.S. power generating fleet with approximately 24,000 megawatts of electric generating capacity. Entergy delivers electricity to approximately 3 million utility customers through its operating companies in Arkansas, Louisiana, Mississippi and Texas.

Entergy is traded on the New York Stock Exchange under the symbol ETR.

Forward-looking statements

This press release contains forward-looking statements regarding our planned offer and sale of common stock and the use of the net proceeds from any such sale. We cannot be sure that we will complete the offering or, if we do, on what terms we will complete it. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties. In addition, Entergy management retains broad discretion with respect to the allocation of net proceeds of the offering. The forward-looking statements speak only as of the date of release, and Entergy is under no obligation to, and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

 

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SOURCE Entergy Corporation

FAQ

What is the size of Entergy's (ETR) new stock offering announced in March 2025?

Entergy announced a $1.3 billion common stock offering, with an additional $195 million over-allotment option for underwriters.

When is the settlement date for ETR's forward sale agreements?

The forward sale agreements are expected to settle on or prior to September 30, 2026.

How will Entergy (ETR) use the proceeds from the stock offering?

The proceeds will be used for general corporate purposes, including potential repayment of commercial paper, revolving credit facility loans, or other debt.

Which investment banks are managing Entergy's 2025 stock offering?

Morgan Stanley, BofA Securities, J.P. Morgan, and Mizuho are acting as joint book-running managers for the offering.

What settlement options does ETR have for the forward sale agreements?

Entergy can elect physical settlement, cash settlement, or net share settlement for all or a portion of its obligations.