8-KMaterial AgreementsOther EventsExhibits & Filings

DOMINION ENERGY, INC 8-K Report, Material Agreement (Apr 2, 2018)

Filed April 2, 2018For Securities:D

Summary

Dominion Energy, Inc. (D) filed an 8-K on April 2, 2018, detailing significant financing activities undertaken on March 27, 2018. The company entered into forward sale agreements with Credit Suisse Capital LLC and Goldman Sachs & Co. LLC for an aggregate of 20,000,000 shares of its common stock. These agreements are designed to provide the company with capital, with settlement expected by December 31, 2018. The initial forward sale price is set at $67.3258 per share, which is the offering price less underwriting discounts and expenses. Furthermore, the company granted underwriters an option to purchase an additional 3,000,000 shares. This issuance is related to a public offering where forward sellers sold borrowed shares. While the company anticipates physical settlement by delivering shares in exchange for cash proceeds, the agreements allow for cash or net share settlement under certain conditions, which could impact the ultimate proceeds received and potentially dilute existing shareholders. Investors should monitor the settlement process and any potential acceleration events that could trigger earlier settlement or different settlement methods.

Key Highlights

  • 1Dominion Energy entered into forward sale agreements for 20,000,000 shares of common stock with Credit Suisse and Goldman Sachs.
  • 2The agreements are expected to settle by December 31, 2018, providing capital to the company.
  • 3Initial forward sale price is set at $67.3258 per share, derived from the public offering price.
  • 4The company granted underwriters an option to purchase an additional 3,000,000 shares.
  • 5The transaction is linked to a public offering where forward sellers sold borrowed shares.
  • 6Agreements allow for physical, cash, or net share settlement, with a preference for physical settlement.
  • 7Underwriters or forward purchasers have rights to accelerate settlement under specific conditions, potentially leading to dilution.

Frequently Asked Questions

The primary purpose of these forward sale agreements is to provide Dominion Energy with capital. The company expects to receive cash proceeds upon the physical settlement of these agreements, which are anticipated to occur by December 31, 2018.

The company has the right to elect physical, cash, or net share settlement. Dominion Energy expects to physically settle these agreements by issuing and delivering shares of its common stock to the forward purchasers in exchange for cash proceeds. However, cash or net share settlement remains a possibility under certain conditions.

A key risk for investors is potential dilution. If the forward purchasers exercise their right to accelerate settlement, or if certain other events occur, Dominion Energy may be required to deliver shares of its common stock. This could result in dilution to earnings per share, return on equity, and dividends per share for existing shareholders. Additionally, the specific terms of settlement could impact the net capital received by the company.

The initial forward sale price is set at $67.3258 per share. This price is based on the per-share offering price of $67.85 in the related public offering, less the underwriting discount and before expenses. The price is subject to certain adjustments.