8-KMaterial AgreementsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Material Agreement (Aug 16, 2018)

Filed August 16, 2018For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) announced on August 16, 2018, that it entered into an Underwriting Agreement for a public offering of $800 million in Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock. This offering aims to raise significant capital for the company. The Series A Preferred Stock will pay a fixed dividend of 6.125% annually until September 1, 2023, after which the rate will become floating, tied to three-month USD LIBOR plus a spread of 3.270%. Investors should note the dual nature of the dividend rate, which offers a predictable fixed return for the initial period but introduces interest rate risk thereafter. The offering is being made under an existing registration statement and is expected to close on August 22, 2018. The details of the preferred stock's rights and limitations will be further defined in a statement of resolutions filed with the State of Texas.

Key Highlights

  • 1CenterPoint Energy is issuing $800 million of Series A Preferred Stock through an underwritten public offering.
  • 2The Series A Preferred Stock carries a fixed dividend rate of 6.125% until September 1, 2023.
  • 3Post-September 1, 2023, the dividend rate will convert to a floating rate: three-month USD LIBOR + 3.270%.
  • 4This issuance is an underwritten offering, indicating involvement of investment banks as underwriters.
  • 5The offering is expected to close on August 22, 2018.
  • 6The preferred stock has a liquidation preference of $1,000 per share.
  • 7The specific rights and restrictions of the Series A Preferred Stock will be detailed in a Texas state filing prior to closing.

Frequently Asked Questions

The filing does not explicitly state the purpose of the offering. However, such offerings are typically conducted to raise capital for general corporate purposes, to fund acquisitions, investments, or to refinance existing debt.

The Series A Preferred Stock pays a fixed dividend of 6.125% per year until September 1, 2023. After this date, the dividend rate will adjust quarterly to a floating rate equal to three-month USD LIBOR plus a spread of 3.270%.

The floating dividend rate introduces interest rate risk for investors. If LIBOR increases significantly after September 1, 2023, the dividend income received by the investor will also increase. Conversely, if LIBOR decreases, the dividend income will decrease. This makes the future income stream less predictable compared to the fixed rate period.

The offering is expected to close on August 22, 2018. Investors who participate in the offering will receive their shares on or around this date.