NiSource Announces Two-Year $900 Million At-The-Market (ATM) Equity Issuance Program
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Insights
The establishment of an at-the-market (ATM) equity offering program by NiSource Inc. is a strategic move that could provide the company with flexible financing options over the next few years. By setting up a program that allows for the sale of up to $900 million in common stock through December 31, 2025, NiSource is positioning itself to tap into the market on an as-needed basis to fund various corporate initiatives.
From a financial perspective, this approach can be more advantageous than traditional follow-on public offerings, as it minimizes the disruption to the stock price that can occur with larger, less frequent sales. It also allows the company to take advantage of favorable market conditions over an extended period. However, the potential dilution of existing shareholders' equity is a concern, as the issuance of new shares could lead to a decrease in earnings per share if the capital raised does not generate a proportional increase in net income.
Investors should monitor the utilization of this program closely, as frequent sales could indicate a need for liquidity or a strategic shift in the company's capital structure. Additionally, the use of forward sale agreements as part of the program introduces counterparty risk, although it also provides a hedge against market volatility for the shares sold forward.
The ATM equity offering program is a signal to the market regarding NiSource's future capital requirements and financial strategy. By engaging multiple reputable financial institutions as Agents and Forward Purchasers, NiSource is ensuring a broad distribution network for its shares. This move could be interpreted as a positive indicator of the company's growth prospects and the anticipated need for capital to finance expansion or other projects.
However, the actual impact on the stock price will depend on investor perception of the company's growth potential and the effectiveness of its capital allocation. If the market believes that the additional capital will be used for value-accretive projects, the reaction could be favorable. Conversely, if investors are concerned about potential over-leverage or underperformance of the financed projects, the stock could face downward pressure.
Additionally, the market will likely assess the timing and volume of share sales under the program, as these will affect the stock's supply-demand dynamics. The ability of NiSource to execute sales at or near prevailing market prices will be crucial in minimizing the dilutive effect and maintaining shareholder value.
The use of an ATM equity offering program is governed by specific securities regulations, including Rule 415 under the Securities Act of 1933, which allows for 'at the market offerings.' NiSource's compliance with these regulations, as evidenced by the effective registration statement and the prospectus supplement, is essential for the legitimacy of the offering. Potential investors are provided with the necessary legal disclosures to make informed decisions.
Furthermore, the involvement of multiple Agents and Forward Purchasers in the distribution agreements also necessitates a robust legal framework to manage the relationships and responsibilities of each party. The legal structure of the forward sale agreements is particularly complex, as it involves borrowing and hedging strategies that must be carefully outlined to prevent legal disputes and ensure regulatory compliance.
Investors should take note of the legal intricacies of these agreements, as they can have significant implications on the timing and certainty of the funding available to the company, as well as the financial risk associated with the forward sale components of the offering.
NiSource has entered into separate equity distribution agreements with each of Barclays Capital Inc., BMO Capital Markets Corp., BofA Securities, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc. and Wells Fargo Securities, LLC in their respective capacities as sales agents and as forward sellers (collectively, the “Agents”). Pursuant to these agreements, sales of shares of NiSource’s common stock may be offered and sold by any method or payment permitted by law to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including by means of ordinary brokers’ transactions on the New York Stock Exchange, the existing trading market for shares of NiSource’s common stock, or otherwise at market prices prevailing at the time of sale, or sales made to or through a market maker or through an electronic communications network.
In addition to the issuance and sale of shares of its common stock through the Agents, NiSource may also enter into forward sale agreements under a separate master forward sale confirmation and related supplemental confirmation with the Agents or certain of their respective affiliates, each in their capacity as forward purchasers (collectively, the “Forward Purchasers”). In connection with each forward sale agreement, the relevant Forward Purchaser (or its affiliate) will, at NiSource’s request, attempt to borrow from third parties and, through the relevant Agent, sell a number of shares of NiSource’s common stock equal to the number of shares that underlie the forward sale agreement to hedge such forward sale agreement.
NiSource intends to use the proceeds from the sales, if any, of the shares of its common stock for general corporate purposes, including to finance capital expenditures, for working capital and to repay existing indebtedness.
A registration statement relating to these securities is effective under the Securities Act. The offering is being made by means of a prospectus supplement to the prospectus contained in the registration statement. Before making an investment in these securities, potential investors should read the prospectus supplement and the accompanying prospectus for more complete information about NiSource and the offering. Potential investors may obtain these documents for free by visiting EDGAR on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov. Alternatively, potential investors may contact any Agent participating in the offering, who will arrange to send them these documents: Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About NiSource
NiSource Inc. (NYSE: NI) is one of the largest fully-regulated utility companies in
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Forward-Looking Statements
This press release contains “forward-looking statements,” within the meaning of Section 27A of the Securities, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements in this press release include, but are not limited to, the anticipated use of proceeds and any and all underlying assumptions and other statements that are other than statements of historical fact. Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. Expressions of future goals and expectations and similar expressions, including “may,” “will,” “should,” “could,” “would,” “aims,” “seeks,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,” “potential,” “targets,” “forecast,” and “continue,” reflecting something other than historical fact are intended to identify forward-looking statements. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.
Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this press release include, among other things, our ability to execute our business plan or growth strategy, including utility infrastructure investments; potential incidents and other operating risks associated with our business; our ability to work successfully with our third-party investors; our ability to adapt to, and manage costs related to, advances in technology, including alternative energy sources and changes in laws and regulations; our increased dependency on technology; impacts related to our aging infrastructure; our ability to obtain sufficient insurance coverage and whether such coverage will protect us against significant losses; the success of our electric generation strategy; construction risks and supply risks; fluctuations in demand from residential and commercial customers; fluctuations in the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demand; our ability to attract, retain or re-skill a qualified, diverse workforce and maintain good labor relations; our ability to manage new initiatives and organizational changes; the actions of activist stockholders; the performance and quality of third-party suppliers and service providers; potential cybersecurity attacks or security breaches; increased requirements and costs related to cybersecurity; any damage to our reputation; the impacts of natural disasters, potential terrorist attacks or other catastrophic events; the physical impacts of climate change and the transition to a lower carbon future; our ability to manage the financial and operational risks related to achieving our carbon emission reduction goals, including our Net Zero Goal (as defined in our Annual Report on Form 10-K for the year ended December 31, 2023); our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; adverse economic and capital market conditions, including increases in inflation or interest rates, recession, or changes in investor sentiment; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; economic conditions in certain industries; the reliability of customers and suppliers to fulfill their payment and contractual obligations; the ability of our subsidiaries to generate cash; pension funding obligations; potential impairments of goodwill; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; compliance with changes in, or new interpretations of applicable laws, regulations and tariffs; the cost of compliance with environmental laws and regulations and the costs of associated liabilities; changes in tax laws or the interpretation thereof; and other matters set forth in Item 1, “Business,” Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and our subsequent SEC filings, some of which risks are beyond our control.
All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240222042037/en/
Media
Lynne Evosevich
Corporate Media Relations
(724) 288-1611
levosevich@nisource.com
Investors
Christopher Turnure
Investor Relations
(614) 404-9426
cturnure@nisource.com
Michael Weisenburger
Investor Relations
(614) 202-2595
mweisenburger@nisource.com
Source: NiSource Inc.
FAQ
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