South Jersey Industries, Inc. Announces Results of Final Remarketing of Series B 1.65% Remarketable Junior Subordinated Notes due 2029
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Insights
The announcement by South Jersey Industries, Inc. regarding the unsuccessful final remarketing of its Series B 1.65% Remarketable Junior Subordinated Notes is a significant event for both the company and its investors. The inability to remarket these notes indicates a potential lack of investor confidence or interest in the company's debt instruments, which could be symptomatic of broader market conditions or specific to the company's financial health. The fixed low-interest rate of 1.65% until 2029 may have been below the market's expectation for returns, considering the prevailing interest rates and the creditworthiness of the company.
From a financial perspective, the automatic delivery of the Notes to satisfy the purchase contracts indicates a forced conversion that could dilute shareholder value if the company issues new equity to cover these obligations. The set price of $69.2172 per unit, along with accrued payments, will impact the company's cash outflows. The redemption option available from April 2026 at the principal amount plus interest provides some future liquidity options for the company but does not offer immediate relief. The market will likely monitor SJI's subsequent financial management strategies and its ability to service debt and maintain operations without the influx of capital from the remarketing effort.
The unsuccessful remarketing effort by South Jersey Industries is indicative of the challenges faced by utilities and similar industries in raising capital through debt. The sector is typically characterized by stable but modest growth prospects, which can affect the attractiveness of such financial instruments to investors seeking higher yields, especially in a rising interest rate environment. This event may signal a reassessment of the risk profile associated with SJI's debt offerings.
Investors and analysts may interpret this development as a cue to re-evaluate the company's stock, potentially leading to increased volatility in the short term. The company's future financing options may be perceived as limited, which could affect its ability to invest in growth or infrastructure projects. It is essential to monitor how this event influences the perception of SJI's creditworthiness and the broader utility market's dynamics, as it could impact the cost of capital for similar issuances in the future.
Folsom, NJ, March 28, 2024 (GLOBE NEWSWIRE) -- 
FOR IMMEDIATE RELEASE
South Jersey Industries, Inc. Announces Results of Final Remarketing of Series B
FOLSOM, N.J., March 29, 2024 /PR Newswire/ – South Jersey Industries, Inc. (“SJI” or the “Company”) announced today the unsuccessful final remarketing of its
As of April 1, 2024 (the “purchase contract settlement date”), holders of the Notes constituting a component of the Corporate Units will be deemed to have delivered, automatically and without requiring any additional action on their part, their Notes to SJI to satisfy in full their obligations to pay the purchase price for and settle the purchase contracts constituting a component of their Corporate Units. Accordingly, on April 1, 2024, each holder of a Corporate Unit will receive
About SJI
SJI, an energy infrastructure holding company based in Folsom, NJ, delivers energy services to customers through two primary subsidiaries: SJI Utilities (SJIU) and SJI Energy Enterprises (SJIEE). SJIU houses the Company’s regulated natural gas utility operations, delivering safe, reliable, and affordable natural gas to more than 735,000 residential, commercial and industrial customers across New Jersey via its South Jersey Gas and Elizabethtown Gas subsidiaries. SJIEE houses the Company’s non-utility operations primarily focused on clean energy development and decarbonization via renewable energy production and energy management activities.
FAQ
What is the principal amount of the 2021 Series B 1.65% Remarketable Junior Subordinated Notes due 2029 issued by South Jersey Industries, Inc.?
When is the purchase contract settlement date for the Notes?
How much will each holder of a Corporate Unit receive on April 1, 2024?
When will any remaining Notes be redeemable?
What happens to the Notes after the purchase contract settlement date?
