Spire Prices $350 Million Debt Offering

Rhea-AI Summary

Spire Inc. successfully remarkets senior notes and announces a registered underwritten public offering of $350 million of its 5.300% Senior Notes due 2026. The company will use the proceeds to repay existing debt and for general corporate purposes. Additionally, the company has successfully remarketed $175 million principal amount of its 2021 Series A 0.75 percent Remarketable Senior Notes due 2026. The annual interest rate on the Remarketable Notes was reset to 5.195%. The Offering is expected to close on February 12, 2024, subject to customary closing conditions.

Insights

Financial Analyst

The remarketing of Spire Inc.'s Senior Notes indicates a strategic financial maneuver to manage the company's debt profile. By resetting the interest rate on the Remarketable Notes to 5.195% from a previous 0.75%, Spire is responding to the current interest rate environment, which has likely risen since the original issuance. This adjustment aligns with the broader market trends where entities are refinancing their debt obligations due to changes in the interest rate landscape.

The decision to use proceeds from the sale of the new 2026 Notes for debt repayment and general corporate purposes suggests a focus on maintaining liquidity and reducing interest expense, which could potentially lead to an improved debt-to-equity ratio and interest coverage ratio. Such financial metrics are critical for analysts and investors when assessing the company's financial health and creditworthiness.

Furthermore, the involvement of established financial institutions such as Wells Fargo Securities, Mizuho and Morgan Stanley as joint book running managers can be seen as a positive signal, indicating a level of confidence in the offering and potentially enhancing the offering's credibility in the eyes of investors.

Market Research Analyst

Spire Inc.'s recent financial activity should be considered within the context of the utility sector's current market dynamics. The sector is typically characterized by high capital expenditure and stable, long-term revenue streams. This remarketing effort by Spire could be a proactive step to optimize its capital structure in a sector that is sensitive to changes in interest rates, given the typically large debt loads that utilities carry.

Additionally, the move to secure short-term U.S. Treasury securities to fulfill obligations related to the Corporate Units suggests a conservative investment strategy that aims to mitigate risks associated with the stock purchase obligations. This could be viewed favorably by investors who prioritize stability and risk management in their investment decisions.

The timing of such financial maneuvers is also key. If the utility sector is expected to face headwinds, such as regulatory changes or shifts in energy demand, Spire's actions could be seen as a preemptive measure to strengthen its financial position ahead of potential challenges.

Debt Capital Markets Expert

In the context of debt capital markets, Spire Inc.'s decision to remarket its Senior Notes is a significant event. It reflects the company's active management of its capital structure and its ability to access capital markets to refinance existing obligations. The increase in the interest rate of the Remarketable Notes to 5.195% is indicative of the current cost of borrowing for corporations, especially in a potentially rising interest rate environment.

The offering's success will depend on various factors, including investor appetite for utility sector debt, prevailing interest rates and the perceived credit risk of Spire Inc. The fact that the offering is being made through a prospectus supplement suggests that the company is taking advantage of shelf registration, which allows for a more efficient and timely process in capital raising activities.

It is also noteworthy that Spire will not receive proceeds from the sale of the 2026 Notes by the selling securityholders. This detail is important for investors, as it indicates that the total amount of debt on Spire's balance sheet will not increase as a result of this transaction, which maintains the company's leverage metrics.

Successfully Remarkets Senior Notes

ST. LOUIS, Feb. 5, 2024 /PRNewswire/ -- Spire Inc. (NYSE: SR) announced today that it has priced a registered underwritten public offering (the "Offering") of an aggregate principal amount of $350 million of its 5.300% Senior Notes due 2026 (the "2026 Notes"), of which $175 million will be sold by Spire and $175 million will be sold by certain selling securityholders.

Spire intends to use the net proceeds from its sale of the $175 million of 2026 Notes to repay existing debt and for general corporate purposes. Spire will not receive any proceeds from the sale of the 2026 Notes by the selling securityholders. The Offering is expected to close on February 12, 2024, subject to the satisfaction of customary closing conditions.

In addition, Spire announced today that it has successfully remarketed $175 million principal amount of its 2021 Series A 0.75 percent Remarketable Senior Notes due 2026 (the "Remarketable Notes") originally issued as a part of Spire's offering of its corporate units (the "Corporate Units") in February 2021 (the "Remarketing"). As a result of the Remarketing, the annual interest rate on the Remarketable Notes was reset to 5.195%. Proceeds from the Remarketing will be used to purchase short-term U.S. Treasury securities that will be pledged to secure the stock purchase obligations of the holders of the Corporate Units. The Remarketing is expected to close on February 12, 2024, subject to the satisfaction of customary closing conditions.

Wells Fargo Securities, Mizuho, and Morgan Stanley are acting as joint book running managers of the Offering.

The Offering will be made only by means of a prospectus supplement and an accompanying prospectus, copies of which may be obtained from:

Wells Fargo Securities, LLC
608 2nd Avenue South, Suite 1000
Minneapolis, Minnesota 55402
Attn: WFS Customer Service
1-800-645-3751
wfscustomerservice@wellsfargo.com

or

Mizuho Securities USA LLC
1271 Avenue of the Americas
New York, New York 10020
Attn: Debt Capital Markets
1-866-271-7403

or

Morgan Stanley & Co. LLC
180 Varick Street
New York, New York 10014
Attn: Prospectus Department  

A shelf registration statement relating to the securities in the Offering has been filed previously with the Securities and Exchange Commission and is effective.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any state or jurisdiction to any person to whom it is unlawful to make an offer, solicitation or sale in such state or jurisdiction.

About Spire

At Spire Inc. (NYSE: SR) we believe energy exists to help make people's lives better. It's a simple idea, but one that's at the heart of our company. Every day we serve 1.7 million homes and businesses making us one of the largest publicly traded natural gas companies in the country. We help families and business owners fuel their daily lives through our gas utilities serving Alabama, Mississippi and Missouri. Our natural gas-related businesses include Spire Marketing and Spire Midstream. We are committed to transforming our business through growing organically, investing in infrastructure, and advancing through innovation.

Forward-Looking and Cautionary Statements

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Spire's future operating results may be affected by various uncertainties and risk factors, many of which are beyond the Company's control, including weather conditions, economic factors, the competitive environment, governmental and regulatory policy and action, and risks associated with acquisitions. For a more complete description of these uncertainties and risk factors, see the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2023, each as filed with the Securities and Exchange Commission.

Investor Contact:
Megan L. McPhail
314-309-6563
Megan.McPhail@SpireEnergy.com

Media Contact:
Jason Merrill
314-342-3300
Jason.Merrill@SpireEnergy.com

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SOURCE Spire Inc.

FAQ

What is the purpose of the registered underwritten public offering announced by Spire Inc.?

The purpose of the registered underwritten public offering is to raise an aggregate principal amount of $350 million of its 5.300% Senior Notes due 2026, with $175 million being sold by Spire and $175 million being sold by certain selling securityholders. The net proceeds from the sale of the $175 million of 2026 Notes will be used to repay existing debt and for general corporate purposes.

What is the interest rate on the Remarketable Notes that Spire Inc. has successfully remarketed?

The annual interest rate on the Remarketable Notes was reset to 5.195% as a result of the successful remarketing of $175 million principal amount of its 2021 Series A 0.75 percent Remarketable Senior Notes due 2026.

Who are the joint book running managers of the Offering announced by Spire Inc.?

Wells Fargo Securities, Mizuho, and Morgan Stanley are acting as joint book running managers of the Offering.

Where can copies of the prospectus supplement and accompanying prospectus for the Offering be obtained?

Copies of the prospectus supplement and accompanying prospectus for the Offering may be obtained from Wells Fargo Securities, LLC, Mizuho Securities USA LLC, and Morgan Stanley & Co. LLC.

What does the news release regarding the Offering from Spire Inc. state?

The news release states that it does not constitute an offer to sell or the solicitation of an offer to buy any securities in any state or jurisdiction to any person to whom it is unlawful to make an offer, solicitation or sale in such state or jurisdiction.