8-KMaterial AgreementsOther EventsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Material Agreement (Feb 19, 2016)

Filed February 19, 2016For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) has filed an 8-K report detailing the closing of a private placement transaction on February 18, 2016. The company purchased 14,520,000 Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Units in Enable Midstream Partners, LP for $25.00 per unit, totaling approximately $363 million. This investment significantly increases CNP's direct and indirect ownership in Enable Midstream Partners, LP, including common units, subordinated units, and partnership management rights. The filing also outlines amendments to Enable Midstream Partners, LP's partnership agreement to establish the terms of these Series A Preferred Units. Key features include their senior ranking to common units for distributions and liquidation, a 10% initial annual dividend rate (fixed for five years, then floating LIBOR + 850 bps), redemption options for the Partnership, and limited voting rights for preferred unit holders. The transaction was financed in part by the redemption of notes previously held by a CNP subsidiary, payable by Enable Midstream.

Key Highlights

  • 1CenterPoint Energy (CNP) closed a private placement of $363 million in Series A Preferred Units of Enable Midstream Partners, LP on February 18, 2016.
  • 2The purchase involves 14,520,000 Series A Preferred Units at $25.00 per unit.
  • 3CNP's ownership stake in Enable Midstream Partners, LP is significantly increased, now directly holding preferred units and indirectly holding common and subordinated units, along with management and incentive distribution rights.
  • 4The Series A Preferred Units rank senior to common units for distributions and liquidation.
  • 5These units carry a 10% annual fixed distribution for the first five years, shifting to a floating rate (LIBOR + 850 bps) thereafter.
  • 6The partnership agreement was amended to establish terms for the Series A Preferred Units, including redemption rights and limited holder voting.
  • 7The transaction was partially funded by Enable Midstream's redemption of $363 million in notes owed to a CNP subsidiary.

Frequently Asked Questions

The 8-K filing announces the closing of CenterPoint Energy's private placement purchase of Series A Preferred Units in Enable Midstream Partners, LP. It details the terms of the investment, its impact on CNP's ownership in Enable, and amendments to Enable's partnership agreement related to these new preferred units.

This transaction substantially increases CenterPoint Energy's involvement with Enable Midstream Partners. Beyond directly owning the newly acquired Series A Preferred Units, CNP indirectly owns a larger portion of Enable's common and subordinated units, as well as a 50% stake in the general partner's management rights and a 40% interest in the incentive distribution rights.

The Series A Preferred Units were purchased at $25.00 each. They are non-cumulative and receive a quarterly cash distribution at an annual rate of 10% on the liquidation preference for the first five years. After five years, the rate converts to LIBOR plus a 850 basis point spread. The units have no maturity date but are redeemable by the Partnership starting five years after issuance or under specific circumstances like a change of control.

Part of the financing for CenterPoint Energy's investment came from Enable Midstream Partners redeeming approximately $363 million of notes that were scheduled to mature in 2017 and were payable to a wholly-owned subsidiary of CenterPoint Energy. The proceeds from this redemption were used by CNP for its investment in the Series A Preferred Units.