WEC Energy Group Announces Preliminary Results of Tender Offer and Initial Settlement of Tender Offer
- WEC Energy Group successfully received valid tenders for a significant amount of the Notes, indicating investor confidence.
- The early settlement right for Notes validly tendered and not validly withdrawn prior to the Early Tender Time provides an advantage to the participating holders.
- The company's principal utilities are serving nearly 4.7 million customers in Wisconsin, Illinois, Michigan, and Minnesota, demonstrating a strong customer base and market presence.
- The Tender Offer will expire on February 7, 2024, and the Final Settlement Date, if any, is expected to occur on February 9, 2024, which may lead to uncertainty for the company and the shareholders.
- The retail processing fee of $2.50 for each $1,000 principal amount of Notes may result in additional expenses for the company.
Insights
The recent announcement by WEC Energy Group regarding the early tender results of their offer to purchase junior subordinated notes due 2067 has significant implications for the company's capital structure and debt management strategy. The repurchase of these long-term debts before their maturity can be seen as a move to optimize the company's interest expenses and overall financial profile. By repurchasing debt at a price below par, WEC Energy Group is effectively reducing its future interest obligations, which could lead to an improved net interest margin over time.
The tender offer's acceptance rate and the terms provided, including the early tender premium, suggest that the company is incentivizing investors to participate in the debt buyback. This strategy could be indicative of a favorable liquidity position or a strategic reallocation of capital towards investments with potentially higher returns. The impact on the stock market could be nuanced; while debt reduction is typically viewed positively, the cost of the buyback and the company's long-term financial strategy will be closely scrutinized by investors.
WEC Energy Group's tender offer for its 2007 Series A Junior Subordinated Notes provides insight into the company's approach to managing its long-dated liabilities. The decision not to extend the withdrawal deadline and the setting of a maximum acceptance amount are indicative of a disciplined approach to liability management. The use of an early settlement right and the offering of an early tender premium are common tactics in such offers, aimed at achieving a high participation rate from note holders.
Moreover, the decision to potentially increase the maximum acceptance amount, subject to applicable law, shows flexibility in the company's capital management strategy. The pricing of the tender offer, with holders receiving $943.75 per $1,000 principal amount, reflects the current market conditions and the company's assessment of the value of early liquidity to note holders. The absence of proration for notes tendered before the early tender deadline suggests that the company has a clear target for the amount of debt it wishes to retire early.
The move by WEC Energy Group to repurchase a portion of its junior subordinated notes is not an isolated event but part of a broader trend where corporations actively manage their debt portfolios. The tender offer may signal confidence in the company's operational performance and future cash flows, allowing for such financial maneuvers without compromising financial stability. From a market perspective, such actions can be interpreted as a company's proactive stance on capital structure optimization, potentially leading to a more favorable view among investors and analysts.
Additionally, the context in which this tender offer occurs is critical. It reflects the current interest rate environment and the company's cost of capital. Depending on these factors, the repurchase of debt could be more cost-effective than carrying the debt to maturity, especially if the market expects interest rates to rise. This could be an attempt to lock in lower interest costs before any anticipated rate hikes, which would be of interest to stakeholders tracking the company's financial strategies.
As of 5:00 p.m.,
WEC Energy Group also announced the exercise of its early settlement right for Notes validly tendered and not validly withdrawn prior to the Early Tender Time. A total of
Holders (as defined in the Offer to Purchase) of Notes validly tendered and not validly withdrawn prior to the Expiration Time (as defined below) are receiving the total consideration of
The following table sets forth certain terms of the Tender Offer:
Title of Security | CUSIP Number | Aggregate Principal Amount Outstanding | Maximum Acceptance Amount | Principal Amount Tendered and Accepted For Purchase on the Early Settlement Date | Tender Offer Consideration(1)(2) | Early Tender Premium(2)(3) | Total Consideration(2)(4) |
2007 Series A Junior Subordinated Notes due 2067 | 976657AH9 |
(1) | For each |
(2) | Excludes any Accrued Interest, which will be paid in addition to the Tender Offer Consideration (as defined below) or the Total Consideration (as applicable). |
(3) | For each |
(4) | The Total Consideration equals the sum of the Tender Offer Consideration and the Early Tender Premium. |
The withdrawal deadline for the Tender Offer was 5:00 p.m.,
WEC Energy Group will purchase any remaining Notes that have been validly tendered and not validly withdrawn after the Early Tender Time and at or prior to the Expiration Time, subject to all conditions to the Tender Offer having been satisfied or waived by WEC Energy Group and subject to the Maximum Acceptance Amount, on the Final Settlement Date (as defined below), if any. Notes tendered after the Early Tender Time may be subject to proration if the aggregate principal amount of the Notes validly tendered and not validly withdrawn as of the Expiration Time is greater than the Maximum Acceptance Amount. WEC Energy Group reserves the right, but is under no obligation, to increase the Maximum Acceptance Amount at any time, subject to compliance with applicable law. The Final Settlement Date, if any, is expected to occur promptly following the Expiration Time and is expected to be February 9, 2024 (the "Final Settlement Date"), unless extended by WEC Energy Group. No tenders of Notes submitted after the Expiration Time will be valid.
As provided in the Offer to Purchase, Holders of any Notes validly tendered after the Early Tender Time and prior to the Expiration Time and accepted for purchase will receive
The obligation of WEC Energy Group to accept for purchase, and to pay for, Notes that are validly tendered and not validly withdrawn pursuant to the Tender Offer is conditioned on the satisfaction or waiver by WEC Energy Group of a number of conditions as described in the Offer to Purchase. Subject to applicable law and the terms and conditions of the Offer to Purchase, WEC Energy Group may terminate the Tender Offer, waive any or all of the conditions of the Tender Offer prior to the Expiration Time, extend the Expiration Time or amend the terms of the Tender Offer.
WEC Energy Group has agreed to pay a retail processing fee equal to
The complete terms and conditions of the Tender Offer are described in the Offer to Purchase, a copy of which may be obtained from Global Bondholder Services Corporation, the depositary and information agent for the Tender Offer, by calling (212) 430-3774 (collect) or (855) 654-2015 (toll free).
WEC Energy Group has retained Barclays Capital Inc. as the dealer manager for the Tender Offer. Questions regarding the terms of the Tender Offer may be directed to the Liability Management Group of Barclays Capital Inc. by calling (212) 528-7581 (collect) or (800) 438-3242 (toll free) or by email at us.lm@barclays.com.
None of WEC Energy Group, its board of directors (or any committee thereof), the dealer manager, the depositary and the information agent, the trustee for the Notes or their respective affiliates is making any recommendation as to whether or not holders of the Notes should tender all or any portion of their Notes in the Tender Offer. Holders must make their own decision as to whether to tender Notes and, if so, the principal amount of the Notes to tender.
This announcement is not an offer to purchase or a solicitation of an offer to sell with respect to any securities. The Tender Offer is being made solely by the Offer to Purchase. The Tender Offer is not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where the securities, blue sky or other laws require the Tender Offer to be made by a licensed broker or dealer and the Dealer Manager or any of the dealer manager's affiliates is such a licensed broker or dealer in any such jurisdiction, the Tender Offer shall be deemed to be made by such dealer manager or affiliate, as the case may be, on behalf of WEC Energy Group in such jurisdiction.
WEC Energy Group (NYSE: WEC), based in
The company's principal utilities are We Energies, Wisconsin Public Service, Peoples Gas, North Shore Gas, Michigan Gas Utilities, Minnesota Energy Resources and Upper Michigan Energy Resources. Another major subsidiary, We Power, designs, builds and owns electric generating plants. In addition, WEC Infrastructure LLC owns a growing fleet of renewable generation facilities in states ranging from
WEC Energy Group (wecenergygroup.com) is a Fortune 500 company and a component of the S&P 500. The company has approximately 35,000 stockholders of record, 7,000 employees and more than
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SOURCE WEC Energy Group
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