What are the "2016 Series A Corporate Units"?

The 2016 Series A Corporate Units are a financing instrument issued by Dominion Resources, Inc. Each unit, valued at $50, consists of a contract to purchase shares of Dominion's common stock by August 15, 2019, and a partial ownership stake in two series of Dominion's subordinated notes due in 2021 and 2024. These units are designed to raise capital for the company while offering investors a combination of equity conversion potential and fixed-income characteristics.

What is the purpose of issuing these corporate units?

The primary purpose of issuing these corporate units is to raise capital for Dominion Resources, Inc. This capital could be used for general corporate purposes, to fund ongoing operations, or to support capital expenditures related to the company's utility and energy infrastructure projects. The structure of the units allows the company to access funding from a broader investor base.

How do the subordinated notes function within the corporate unit?

The subordinated notes (2016 Series A-1 RSNs due 2021 and 2016 Series A-2 RSNs due 2024) are a component of the corporate unit and are pledged as collateral to secure the holder's obligation to purchase Dominion's common stock under the associated purchase contract. Before the purchase contract settlement date, these notes are intended to be remarketed. Holders of the corporate units receive interest payments on these notes as part of their overall return.

What is the obligation of a holder of a 2016 Series A Corporate Unit?

The primary obligation of a holder is to purchase shares of Dominion Resources, Inc.'s common stock by August 15, 2019, for $50 in cash per unit, as stipulated by the purchase contract. The pledged subordinated notes serve as collateral to ensure this obligation is met. Holders also receive quarterly contract adjustment payments until the settlement date.

D 8-K SEC Disclosure — Aug 15, 2016

Summary

Dominion Resources, Inc. (now Dominion Energy, Inc.) filed an 8-K on August 15, 2016, to disclose the issuance of 25,000,000 equity units, referred to as "2016 Series A Corporate Units," with an option for underwriters to purchase an additional 3,000,000 units. These units were offered and sold via an underwriting agreement dated August 9, 2016. The primary purpose of this filing is to provide investors with details regarding this new financing instrument and its underlying components. Each corporate unit, with a stated value of $50, comprises three parts: a purchase contract for the company's common stock due by August 15, 2019, a beneficial ownership interest in subordinated notes maturing in 2021 (2016 Series A-1 RSNs), and a similar interest in subordinated notes maturing in 2024 (2016 Series A-2 RSNs). The units also carry a contractual adjustment payment rate of 4.75% per annum. This issuance represents a strategic move by Dominion to raise capital, likely for general corporate purposes or to fund ongoing projects, while offering investors a structured product with equity and debt-like features.

Key Highlights

1Dominion Resources, Inc. issued 25,000,000 (plus an option for 3,000,000 more) "2016 Series A Corporate Units".
2Each corporate unit has a stated amount of $50 and is composed of a stock purchase contract, and interests in two series of subordinated notes.
3The stock purchase contracts obligate holders to buy Dominion common stock by August 15, 2019.
4The units include beneficial ownership interests in 2.0% Remarketable Subordinated Notes due 2021 and 2024.
5Holders are entitled to quarterly contract adjustment payments at an annual rate of 4.75% of the unit's stated amount.
6The subordinated notes serve as collateral for the stock purchase obligation.
7The filing details the various agreements and indentures governing the issuance of these corporate units and their components.

DOMINION ENERGY, INC 8-K Report, Corporate Update (Aug 15, 2016)

Summary

Key Highlights

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