Via Renewables, Inc. Announces Dividend on Preferred Stock
- None.
- Suspension of the common stock dividend could be seen as a negative sign for investors.
Insights
Examining the dividend declaration by Via Renewables for its Series A Preferred Stock is a significant event for investors holding these securities. The declared quarterly cash dividend of $0.75960 per share represents a tangible return on investment for shareholders. Preferred stock dividends are often seen as a commitment to return capital to investors, particularly when a company suspends common stock dividends, as Via Renewables has done. This action underscores the company's prioritization of preferred shareholders, who typically have a fixed dividend rate, over common shareholders during periods of financial adjustment or strain.
Furthermore, the transition from Three-Month LIBOR to Three-Month CME Term SOFR, with an added spread adjustment, is a critical shift that aligns with global financial markets moving away from LIBOR due to its historical manipulation issues. The SOFR is considered to be a more transparent and reliable benchmark, which could affect the perceived risk and valuation of the preferred stock. Investors and analysts will carefully monitor the impact of this benchmark transition on the yield of these securities.
The change in the dividend policy for Via Renewables' preferred stock can be indicative of the company's current liquidity and capital allocation strategy. By maintaining preferred dividends while suspending common stock dividends, the company signals a conservative approach, possibly aiming to conserve cash or redirect funds towards growth initiatives or debt reduction. This decision may affect investor sentiment, potentially attracting income-focused investors while signaling caution to growth-oriented shareholders.
From a market perspective, the fixed-to-floating rate nature of the Series A Preferred Stock, transitioning to a SOFR-based rate, reflects adaptability to changing market conditions. As the market adjusts to the new interest rate benchmarks, the company's proactive compliance with the LIBOR Act and the Federal Reserve's regulations may be viewed positively by the market, as it aligns Via Renewables with current regulatory standards and reduces uncertainty regarding its financial instruments.
The adherence to the LIBOR Act and the final regulations set forth by the Federal Reserve is a critical legal compliance point for Via Renewables. The company's alignment with the LIBOR Act, which mandates the transition from LIBOR to a replacement benchmark rate, is a necessary step in mitigating legal and financial risk. The specific mention of the tenor spread adjustment of 0.26161% added to the SOFR rate is an important detail, as it ensures that the terms of the Series A Preferred Stock remain fair and equitable to investors post-LIBOR. This legal foresight may protect the company from potential litigation or financial discrepancies that could arise from a less structured transition away from LIBOR.
HOUSTON, TX / ACCESSWIRE / January 17, 2024 / Via Renewables, Inc. ("Via Renewables" or the "Company") (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, announced today that, in accordance with the terms of the
In accordance with the Adjustable Interest Rate (LIBOR) Act (the "LIBOR Act") and the final regulations promulgated pursuant thereto by the Board of Governors of the Federal Reserve System ("Board"), the LIBOR Act specifies that the replacement benchmark rate on the Series A Preferred Stock following Three-Month LIBOR's end of publication on June 30, 2023 is Three-Month CME Term SOFR, as administered by CME Group Benchmark Administration, Ltd. (or any successor administrator), plus a tenor spread adjustment of
The Company previously elected to suspend its common stock dividend.
About Via Renewables, Inc.
Via Renewables, Inc. is an independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity under our well-established and well-regarded brands, including Spark Energy, Major Energy, Provider Power, and Verde Energy. Headquartered in Houston, Texas, Via Renewables currently operates in 20 states and serves 105 utility territories. Via Renewables offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.
We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should note that new materials, including press releases, updated investor presentations, and financial and other filings with the Securities and Exchange Commission are posted on the Via Renewables Investor Relations website at ViaRenewables.com. Investors are urged to monitor our website regularly for information and updates about the Company.
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These 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"), can be identified by the use of forward-looking terminology including "may," "should," "could," "likely," "will," "believe," "expect," "anticipate," "estimate," "continue," "plan," "intend," "project," or other similar words. All statements, other than statements of historical fact, included in this press release are forward-looking statements. The forward-looking statements include statements regarding the impacts of Winter Storm Uri, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, the timing, availability, ability to pay and implied amount of cash dividends and distributions on our Class A common stock and Series A Preferred Stock, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives, beliefs of management, availability and terms of capital, competition, government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.
The forward-looking statements in this press release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:
- our ability to remediate the material weakness in our internal control over financial reporting, the identification of any additional material weakness in the future or otherwise failing to maintain an effective system of internal controls;
- the ultimate impact of Winter Storm Uri, including future benefits or costs related to ERCOT market securitization efforts, and any corrective action by the State of Texas, ERCOT, the Railroad Commission of Texas, or the Public Utility Commission of Texas;
- changes in commodity prices, the margins we achieve, and interest rates;
- the sufficiency of risk management and hedging policies and practices;
- the impact of extreme and unpredictable weather conditions, including hurricanes, heat waves, and other natural disasters;
- federal, state and local regulations, including the industry's ability to address or adapt to potentially restrictive new regulations that may be enacted by public utility commissions;
- our ability to borrow funds and access credit markets;
- restrictions and covenants in our debt agreements and collateral requirements;
- credit risk with respect to suppliers and customers;
- our ability to acquire customers and actual attrition rates;
- changes in costs to acquire customers;
- accuracy of billing systems;
- our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
- significant changes in, or new changes by, the independent system operators ("ISOs") in the regions we operate;
- competition; and
- the "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, and other public filings and press releases.
You should review the risk factors and other factors noted throughout this press release that could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this press release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Contact: Via Renewables, Inc.
Investors:
Stephen Rabalais, 832-200-3727
Media:
Kira Jordan, 832-255-7302
SOURCE: Via Renewables, Inc.
View the original press release on accesswire.com
FAQ
What is the quarterly cash dividend announced by Via Renewables, Inc.?
When will the dividend be paid?
When did the floating rate period for the Series A Preferred Stock begin?
What is the replacement benchmark rate for the Series A Preferred Stock following the end of Three-Month LIBOR's publication?
Did the company suspend its common stock dividend?
