Xcel Energy Inc. raised $2.2 billion from convertible bonds, enlarging the deal from $2 billion as the Minneapolis utility uses equity-linked debt with a 2.625% coupon to refinance short-term borrowings.
The 2.625% senior unsecured notes mature on Dec. 15, 2027, an unusually short life for a convertible, and can’t be redeemed early, the company said late Monday. Buyers have an option to purchase up to $300 million more within 13 days of issuance. The sale is expected to close Thursday and should bring in about $2.18 billion after fees, or about $2.48 billion if the option is fully exercised.
Paying down short-term debt
Xcel said it will use the proceeds to repay short-term borrowings, including part of its commercial paper and part of a 364-day delayed-draw term loan, and for general corporate purposes.
Conversion terms
The notes convert at an initial rate of 11.4596 shares per $1,000 of principal, equal to about $87.26 a share, roughly 10% above Monday’s closing price. Before mid-September 2027 holders can convert only if certain conditions are met. On conversion, Xcel will repay principal in cash and can settle any excess value in cash, shares or a mix. Xcel’s stock fell about 3% in premarket trading Monday after the company announced the offering.
The notes were sold privately to qualified institutional buyers and haven’t been registered with securities regulators.
