8-KShareholder MattersCorporate ChangesExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Rights Modification (Aug 23, 2018)

Filed August 23, 2018For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) filed an 8-K on August 23, 2018, to detail the creation and terms of its Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock. This new class of preferred stock, effective August 22, 2018, has a liquidation preference of $1,000 per share and will initially pay a fixed dividend rate of 6.125% annually until September 1, 2023. After September 1, 2023, the dividend rate will become floating, tied to three-month LIBOR plus a spread of 3.270%. The preferred stock is perpetual, with no maturity date, but CenterPoint Energy has the option to redeem it starting September 1, 2023, at $1,000 per share, plus accrued dividends. A special redemption option exists at $1,020 per share following a ratings event. This issuance impacts the capital structure by ranking senior to common stock and other junior stock in terms of dividends and liquidation preference, while being subordinate to any future senior preferred stock.

Key Highlights

  • 1CenterPoint Energy established Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock.
  • 2The Series A Preferred Stock has an initial fixed dividend rate of 6.125% per annum until September 1, 2023.
  • 3From September 1, 2023, the dividend rate will convert to a floating rate (3-month LIBOR + 3.270%).
  • 4The preferred stock has a liquidation preference of $1,000 per share.
  • 5CenterPoint Energy can redeem the preferred stock on or after September 1, 2023, at $1,000 per share, plus accrued dividends.
  • 6A 'ratings event' allows for redemption at $1,020 per share.
  • 7The Series A Preferred Stock ranks senior to common stock regarding dividends and liquidation, but subordinate to any future senior preferred stock.

Frequently Asked Questions

The primary purpose is to formally announce and detail the terms of the newly established Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, including its dividend structure, redemption features, and rights relative to other classes of stock.

The initial annual dividend rate is 6.125% of the $1,000 stated amount, payable semi-annually. This fixed rate applies until September 1, 2023. After this date, the rate becomes floating, calculated as three-month LIBOR plus a 3.270% spread.

CenterPoint Energy can redeem the Series A Preferred Stock at its option on or after September 1, 2023, at a price of $1,000 per share plus any accumulated and unpaid dividends. Additionally, it can be redeemed in whole, but not in part, at $1,020 per share plus accrued dividends, if a 'ratings event' occurs.

The Series A Preferred Stock ranks senior to CenterPoint Energy's common stock and any future stock expressly made subordinate to it. It ranks on parity with any future stock not expressly made senior or subordinate, and junior to any future stock expressly made senior to it, in terms of dividends and liquidation preferences.