NiSource Inc. Announces Redemption of All Depositary Shares Representing Interests in Its 6.50% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock and Series B-1 Preferred Stock
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Insights
The redemption of NiSource's Series B and Series B-1 Preferred Stock and the corresponding Depositary Shares is a significant financial maneuver that may indicate a strategic shift in the company's capital structure. This action could be interpreted as an effort to optimize the company's cost of capital by retiring securities with a relatively high fixed dividend rate of 6.50%. In the current interest rate environment, refinancing or reallocating capital to lower-cost alternatives could potentially reduce interest expenses and improve net income margins.
Investors should consider the implications of this redemption on NiSource's balance sheet and future interest expenses. The redemption price of $25.00001 per Depositary Share suggests a commitment to honoring the precise terms of the securities, which could reflect positively on the company's governance and reliability. However, stakeholders must also consider the opportunity cost of the capital used for redemption and whether those funds could have been deployed for growth initiatives or other investments.
The redemption of preferred stock is an event that often follows a reassessment of a company's financial strategy and can be an indicator of its future direction. For NiSource, this move may signal confidence in its financial position and a forecast of stable cash flows sufficient to cover the redemption costs. It is also essential to analyze the market's reaction to this announcement as it could affect investor perception and NiSource's stock liquidity.
Market participants might also interpret this redemption as a sign that NiSource is preparing for new financial ventures or investment opportunities. By eliminating the 6.50% dividend obligation, NiSource could be seen as freeing up resources for potential strategic moves, including acquisitions, organic growth, or debt reduction. This could have a ripple effect across the utility sector, prompting peer companies to reassess their capital structures in light of potential cost-saving opportunities.
From an economic perspective, the redemption of preferred stock by NiSource must be contextualized within the broader economic environment, particularly interest rates and the cost of borrowing. If interest rates are low, the company may be taking advantage of the situation to refinance at a lower cost. Conversely, if rates are expected to rise, NiSource might be locking in a lower cost of capital before an anticipated increase in borrowing costs.
Furthermore, the economic implications of such corporate actions can extend beyond the company itself. They can influence investor sentiment regarding the utility sector and the wider stock market, especially if seen as a harbinger of changing financial conditions or corporate confidence. The decision to redeem preferred stock could also be a response to investor demand for higher liquidity and more traditional equity or debt instruments, which can be more appealing in certain economic climates.
All 20,000,000 Depositary Shares (NYSE: NI PR B) (CUSIP No. 65473P 881), each representing a 1/1,000th ownership interest in one share of the Series B Preferred Stock and a 1/1,000th ownership interest in one share of the Series B-1 Preferred Stock, will be redeemed on the Redemption Date, simultaneously with the redemption of the Series B Preferred Stock and the Series B-1 Preferred Stock, at a redemption price of
The previously declared dividends of
The Depositary Shares are held through The Depository Trust Company (DTC) and will be redeemed in accordance with the procedures of DTC. Payment to DTC for the Depositary Shares will be made by Computershare Inc. and Computershare Trust Company, N.A., collectively, as redemption agent, in accordance with the Deposit Agreement governing the Depositary Shares. The address for the redemption agent is as follows:
Computershare Trust Company, N.A.
Attn: Corporate Actions
150 Royall St.
About NiSource
References in this press release to “NiSource” refer to NiSource Inc. and “we,” “us” or “our” refer collectively to NiSource and its subsidiaries.
NiSource Inc. (NYSE: NI) is one of the largest fully-regulated utility companies in
Forward-Looking Statements
This press release contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), 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, statements concerning the redemption and payment of dividends 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, but are not limited to, 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 adapt to, and manage costs related to, advances in, or failures of, 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 natural gas costs 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 demands; the attraction and retention of a qualified, diverse workforce and ability to maintain good labor relations; our ability to manage new initiatives and organizational changes; the actions of activist stockholders; the performance of third-party suppliers and service providers; potential cybersecurity attacks; increased requirements and costs related to cybersecurity; any damage to our reputation; any remaining liabilities or impact related to the sale of the Massachusetts Business; 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; our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; any adverse effects related to our equity units; adverse economic and capital market conditions or increases in interest rates; inflation; recessions; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; continuing and potential future impacts from the COVID-19 pandemic; 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; potential remaining liabilities related to the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of associated liabilities; changes in taxation; 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, 2022, and matters set forth in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, some of which risks are beyond our control. In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.
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.
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Media
Lynne Evosevich
Corporate Media Relations
(724) 288-1611
levosevich@nisource.com
Investors
Christopher Turnure
Investor Relations
(614) 404-9426
cturnure@nisource.com
Source: NiSource Inc.
FAQ
What is the Redemption Date for NiSource Inc.'s Series B Preferred Stock and Series B-1 Preferred Stock?
What is the redemption price per Depositary Share for the Series B Preferred Stock and Series B-1 Preferred Stock?
When will the dividends for the full regular quarterly dividend period be paid?
Who will be making the payment to DTC for the Depositary Shares?
Where are the Depositary Shares held?
