Xcel Energy Announces the Pricing Terms and Upsizing of its Cash Tender Offers for Outstanding First Mortgage Bonds Issued by Northern States Power Company (a Minnesota Corporation)

Rhea-AI Summary

Xcel Energy (NASDAQ: XEL) has announced the pricing terms and upsizing of its cash tender offers for outstanding first mortgage bonds issued by Northern States Power Company (NSPM). The company has increased the aggregate tender cap from $110,000,000 to $166,000,000. The tender offers target the 2.60% First Mortgage Bonds Series due June 1, 2051.

The total consideration offered is $632.67 per $1,000 principal amount, which includes a $30 early tender payment. The final proration factor is 37.7% due to oversubscription. The settlement date for accepted bonds is expected to be December 18, 2024. Xcel Energy will fund the purchases using cash on hand.

Positive

• Increased tender offer capacity by $56 million to $166 million
• Company has sufficient cash on hand to fund the tender offer

Negative

• High demand led to significant proration (37.7%), meaning most tendered bonds were not accepted

Insights

Fixed Income Analyst

The tender offer for NSPM's 2.60% First Mortgage Bonds due 2051 represents a significant debt management initiative. The upsized tender cap to $166 million from $110 million indicates strong investor participation. The total consideration of $632.67 per $1,000 principal reflects current market conditions, with a fixed spread of 55% over the reference Treasury. With a final proration factor of 37.7%, the oversubscription suggests bondholders' eagerness to exit these positions at the offered terms. This tender offer effectively allows Xcel Energy to retire higher-coupon debt at a discount, potentially leading to interest expense savings and improved debt profile.

Treasury Management Expert

This liability management exercise demonstrates Xcel Energy's proactive approach to debt optimization. Using cash on hand for the tender indicates strong liquidity position. The pricing, at a significant discount to par value, takes advantage of the higher interest rate environment to repurchase long-dated debt (2051 maturity) economically. The oversubscription, evidenced by the 37.7% proration factor, validates the attractive pricing level. The early tender deadline success eliminates the need for additional acceptance periods, streamlining the process and providing certainty to both the company and participating bondholders.

MINNEAPOLIS--(BUSINESS WIRE)-- Xcel Energy Inc. (NASDAQ: XEL) (Xcel Energy) announced today the pricing terms of its previously announced offers to purchase for cash (the Tender Offers) in the order of priority set forth in the table below certain outstanding first mortgage bonds issued by Northern States Power Company, a Minnesota corporation (NSPM), a wholly-owned subsidiary of Xcel Energy (the Bonds), pursuant to an Offer to Purchase, dated December 2, 2024 (as amended by this press release, the Offer to Purchase). The Company has amended the terms of the Tender Offers to increase the aggregate principal amount of Bonds subject to the Tender Offers from $110,000,000 to $166,000,000 (the Aggregate Tender Cap). The terms and conditions of the Tender Offers are described in the Offer to Purchase and remain unchanged, except as described in this press release. Xcel Energy expects to pay for the Bonds purchased in the Tender Offers using cash on hand.

The consideration (the Total Consideration) offered per $1,000 principal amount of Bonds validly tendered and accepted for purchase is based on the fixed spread for such Bonds specified in the table below plus the yield to maturity based on the bid-side price of the U.S. Treasury Reference Security specified in the table below as quoted on the Bloomberg Bond Trader PX1 page at 10:00 a.m., New York City time, today.

The Total Consideration is payable to holders of Bonds who validly tendered and did not validly withdraw their Bonds prior to or at 5:00 p.m., New York City time, on December 13, 2024 (such date and time, the Early Tender Date), and whose Bonds were accepted for purchase by Xcel Energy. The Reference Yield listed in the table was determined at 10:00 a.m., New York City time, today by the Dealer Manager (identified below). The Total Consideration for the Bonds includes an early tender payment of $30 per $1,000 principal amount of Bonds that were validly tendered and not validly withdrawn by such holders and accepted for purchase by Xcel Energy (the Early Tender Payment). Accrued and unpaid interest up to, but not including, the settlement date will be paid in cash on all validly tendered Bonds accepted and purchased by Xcel Energy in the Tender Offers. The settlement date for the Bonds accepted for purchase by Xcel Energy in connection with the Early Tender Date is expected to be December 18, 2024.

Title of Security	CUSIP Number	Issuer	Acceptance Priority Level(1)	U.S. Treasury Reference Security	Reference Yield	Fixed Spread	Total Consideration(2)(3)	Principal Amount Accepted(4)	Final Proration Factor(5)
2.60% First Mortgage Bonds, Series due June 1, 2051 (the 2051 Bonds)	665772 CS6	Northern States Power Company (a Minnesota corporation)	1	4.250% U.S.T. due August 15, 2054	4.611%	+55	$632.67	$166,000,000	37.7%

______________________

(1) The Tender Offers with respect to the Bonds are subject to the Aggregate Tender Cap.

(2) Per $1,000 principal amount.

(3) The Total Consideration includes the Early Tender Payment.

(4) The amount of 2051 Bonds validly tendered and not validly withdrawn at or prior to the Early Tender Date exceeded the Aggregate Tender Cap. As a result, only the 2051 Bonds will be accepted for payment. Xcel Energy has not accepted for purchase Bonds of any series other than the 2051 Bonds and pricing information is only provided for the 2051 Bonds.

(5) The final proration factor has been rounded to the nearest tenth of a percentage point for presentation purposes.

The amount of Bonds accepted for purchase was determined pursuant to the terms and conditions of the Tender Offers as set forth in the Offer to Purchase. Bonds not accepted for purchase will be promptly credited to the account of the registered holder of such Bonds with The Depository Trust Company and otherwise returned in accordance with the Offer to Purchase.

No other series of first mortgage bonds issued by NSPM will be accepted for purchase pursuant to the Tender Offers. Such other first mortgage bonds and the Bonds that are not accepted for purchase will be promptly credited to the account of the registered holder of such securities with The Depository Trust Company or otherwise returned in accordance with the Offer to Purchase.

In accordance with the terms of the Tender Offers, the withdrawal date was 5:00 p.m., New York City time, on December 13, 2024. As a result, tendered Bonds may no longer be withdrawn, except in certain limited circumstances where additional withdrawal rights are required by law.

The Tender Offers will expire at 5:00 p.m., New York City time, on December 31, 2024, or any other date and time to which Xcel Energy extends such Tender Offers, unless earlier terminated. Xcel Energy does not expect to accept for purchase any tender of Bonds after the Early Tender Date because the amount of Bonds validly tendered and not validly withdrawn at or prior to the Early Tender Date exceeded the Aggregate Tender Cap.

Xcel Energy or its affiliates (including NSPM) may from time to time, after completion of the applicable Tender Offers, purchase additional Bonds in the open market, in privately negotiated transactions, through one or more additional tender or exchange offers or otherwise, or NSPM may redeem Bonds that it is permitted to redeem pursuant to their terms. In addition, from time to time, including during the Tender Offers, Xcel Energy or its affiliates (including NSPM) may purchase certain of NSPM's first mortgage bonds that are not subject to the Tender Offers in the open market, in privately negotiated transactions, through tender or exchange offers, or otherwise, or NSPM may redeem such first mortgage bonds that it is permitted to redeem pursuant to their terms. Any future purchases by Xcel Energy or its affiliates (including NSPM) will depend on various factors existing at that time.

Xcel Energy’s obligation to accept for purchase and to pay for the Bonds in the Tender Offers is subject to the satisfaction or waiver of a number of conditions described in the Offer to Purchase. Xcel Energy reserves the right, subject to applicable law, to (i) waive any and all conditions to any of the Tender Offers, (ii) extend or terminate any of the Tender Offers, (iii) increase or decrease the Aggregate Tender Cap, or (iv) otherwise amend any of the Tender Offers in any respect.

Information Relating to the Tender Offer

U.S. Bancorp Investments, Inc. is serving as Dealer Manager in connection with the Tender Offers. D.F. King & Co., Inc. is serving as Tender and Information Agent in connection with the Tender Offers. Copies of the Offer to Purchase or any other documents are available by contacting D.F. King & Co., Inc. via email at Xcel@dfking.com or by phone at (800) 769-7666 (toll-free) or (212) 269-5550 (banks and brokers). Questions regarding the Tender Offers should be directed to U.S. Bancorp Investments, Inc., Liability Management Group at (917) 558-2756 (collect) or (800) 479-3441 (toll-free).

None of Xcel Energy, its affiliates, the Dealer Manager, D.F. King & Co., Inc. or the trustee with respect to any series of Bonds makes any recommendation to any holder whether to tender or refrain from tendering any or all of such holder’s Bonds or how much they should tender, and none of them has authorized any person to make any such recommendation. Holders are urged to evaluate carefully all information in the Offer to Purchase, consult their own investment and tax advisors and make their own decisions with respect to the Tender Offers.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities. The Tender Offers are being made only pursuant to the Offer to Purchase and only in such jurisdictions as is permitted under applicable law.

The full details of the Tender Offers, including complete instruction on how to tender Bonds, are included in the Offer to Purchase. The Offer to Purchase contains important information that should be read by holders of Bonds before making a decision to tender any Bonds. The Offer to Purchase may be obtained from D.F. King & Co., Inc., free of charge, by calling (800) 769-7666 (toll-free) or (212) 269-5550 (banks and brokers), or emailing at Xcel@dfking.com.

About Xcel Energy

Xcel Energy (NASDAQ: XEL) provides the energy that powers millions of homes and businesses across eight Western and Midwestern states. Headquartered in Minneapolis, the company is an industry leader in responsibly reducing carbon emissions and producing and delivering clean energy solutions from a variety of renewable sources at competitive prices.

This press release contains forward-looking statements regarding, among other things, Xcel Energy’s expectations regarding the Tender Offers. Xcel Energy cannot be sure that it will complete the Tender Offers or, if it does, on what terms it will complete the Tender Offers. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption “Forward-Looking Statements” in the Offer to Purchase. The forward-looking statements speak only as of the date of release, and Xcel Energy is under no obligation to, and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as the result of new information, future events or otherwise, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241216102422/en/

For more information, contact:

Paul Johnson, Vice President, Treasury & Investor Relations (612) 215-4535

Roopesh Aggarwal, Senior Director - Investor Relations (303) 571-2855

Source: Xcel Energy

FAQ

What is the total consideration per $1,000 for XEL's tender offer of NSPM 2051 bonds?

The total consideration is $632.67 per $1,000 principal amount, which includes a $30 early tender payment.

What is the new aggregate tender cap for XEL's bond repurchase?

Xcel Energy increased the aggregate tender cap from $110,000,000 to $166,000,000.

When is the settlement date for XEL's accepted bonds in the tender offer?

The settlement date for the accepted bonds is expected to be December 18, 2024.

What is the proration factor for XEL's tender offer of NSPM 2051 bonds?

Due to oversubscription, the final proration factor is 37.7%, meaning only this percentage of tendered bonds will be accepted.

How will XEL fund the tender offer purchase?

Xcel Energy expects to pay for the bonds purchased in the tender offers using cash on hand.