Xcel Energy plans to offer $2 billion in aggregate principal amount of convertible senior notes due 2027 through a private placement, with an option that could increase the offering by another $300 million.
If the additional notes are fully purchased, the Minneapolis-based utility could issue up to $2.3 billion of convertible senior notes.
Xcel Energy plans to use the net proceeds primarily to repay short-term borrowings. This includes a portion of its outstanding commercial paper and borrowings under its 364-day delayed draw term loan agreement.
Remaining proceeds may be used for other general corporate purposes.
The final terms of the notes, including the interest rate, initial conversion price, and other provisions, will be determined when the offering is priced.
The convertible notes will represent senior unsecured obligations of Xcel Energy and will pay interest semiannually in arrears.
Holders will be able to convert the notes under specified conditions and during certain periods.
For conversions, Xcel Energy plans to pay cash up to the aggregate principal amount being converted. Any remaining conversion value above principal may be settled, at the company’s election, in cash, shares of Xcel Energy common stock, or a combination of cash and shares.
The offering is being conducted as a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
The notes, along with any common shares potentially issued upon conversion, have not been registered under the Securities Act or state securities laws. As a result, they generally cannot be offered or sold in the U.S. without an applicable exemption from registration requirements.
The initial purchasers will have 13 days beginning on the date the convertible notes are first issued to exercise their option for up to an additional $300 million of principal amount.
The transaction would give Xcel Energy additional flexibility to refinance near-term borrowings while extending part of its capital structure through convertible debt.
Xcel Energy provides electricity and natural gas services across eight states, including Minnesota, Colorado, Wisconsin, Michigan, North Dakota, South Dakota, New Mexico, and Texas.
The company is also investing in additional power generation and infrastructure as it works to meet rising electricity demand while pursuing its broader clean-energy strategy.
