8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (May 5, 2022)

Filed May 5, 2022For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced the successful closing of an $800.0 million senior notes offering by its wholly owned finance subsidiary, American Water Capital Corp. (AWCC), on May 5, 2022. These notes, bearing a 4.450% interest rate and maturing in 2032, were issued under an underwriting agreement with several financial institutions. The offering generated net proceeds of approximately $792.3 million after accounting for underwriting discounts but before other offering expenses. These proceeds are earmarked for crucial corporate activities, including lending funds to AWK's regulated businesses segment, repaying existing commercial paper obligations, and general corporate purposes. This debt issuance will support the company's ongoing operations and strategic initiatives within its regulated utility operations. Investors should note that this is a debt financing event, which increases leverage but also provides capital for growth and operational stability.

Key Highlights

  • 1AWK's subsidiary, AWCC, successfully closed an $800.0 million offering of 4.450% Senior Notes due 2032.
  • 2The offering closed on May 5, 2022, with net proceeds of approximately $792.3 million after underwriting discounts.
  • 3Proceeds will be used to fund AWK's regulated businesses, repay commercial paper, and for general corporate purposes.
  • 4The notes are supported by a guarantee from American Water Works Company, Inc. through a Support Agreement.
  • 5The issuance was registered under the Securities Act of 1933, indicating compliance with federal securities regulations.
  • 6Key documents, including the Underwriting Agreement and Officers' Certificate, have been filed as exhibits.

Frequently Asked Questions

The primary purpose of this debt issuance by AWCC is to raise capital to support American Water's operations. Specifically, the net proceeds will be lent to American Water and its subsidiaries in its Regulated Businesses segment, used to repay AWCC's commercial paper, and for general corporate purposes.

This offering increases American Water's overall financial leverage as it involves the issuance of new debt. However, the capital raised is intended to support operational needs and potential growth within the regulated utility segment, which typically operates with stable cash flows that can service this debt.

The 'Regulated Businesses' segment refers to AWK's utility operations that provide water and wastewater services and are subject to oversight and rate-setting by state utility commissions or similar regulatory bodies. Funding this segment is crucial for maintaining and upgrading essential infrastructure.

The underwriters for this note offering include BofA Securities, Inc., Mizuho Securities USA LLC, MUFG Securities Americas Inc., and RBC Capital Markets, LLC, acting as representatives of the several underwriters.