Summary
Dominion Energy, Inc. has entered into at-the-market (ATM) program agreements with five financial institutions, allowing them to sell up to $1 billion of the company's common stock. This program enables Dominion to raise capital opportunistically by issuing new shares through its existing shelf registration statement. The structure involves forward sale agreements, where the sales agents borrow shares to sell them immediately, and Dominion receives proceeds later upon settlement. While physical settlement is expected, the company retains the option for cash or net share settlement, which could result in no proceeds or even an obligation for Dominion to pay cash or deliver shares.
Key Highlights
- 1Dominion Energy established an at-the-market (ATM) equity program to sell up to $1 billion of common stock.
- 2The program is established through sales agency agreements with major financial institutions including Citigroup, Credit Suisse, Morgan Stanley, MUFG, and Wells Fargo.
- 3Sales will be made under the company's existing shelf registration statement filed on June 26, 2020.
- 4The ATM program utilizes forward sale agreements, allowing for the immediate sale of borrowed shares.
- 5Dominion Energy will receive proceeds from the sale of shares at a future settlement date, not immediately upon the sale of borrowed shares.
- 6The company has the option to settle forward agreements through cash or net share settlement, which could impact the ultimate proceeds or create an obligation.
- 7This facility provides Dominion flexibility to access equity capital as market conditions allow.
Frequently Asked Questions
The primary purpose is to establish an 'at-the-market' (ATM) equity program, allowing Dominion Energy to opportunistically sell up to $1 billion of its common stock over time to raise capital.
Dominion Energy will not receive proceeds immediately when shares are sold by the forward sellers. Proceeds will be received upon future physical settlement of the forward sale agreements, on dates specified by the company up to the maturity date.
While Dominion expects physical settlement, there's a risk that if they elect cash or net share settlement, they may not receive any proceeds or could even owe cash or additional shares to the forward purchasers.
An ATM program allows for sales to be made gradually over time in the open market, often at prevailing market prices, offering more flexibility and potentially better pricing compared to a large, fixed offering. The use of forward sales adds a layer of complexity regarding the timing of cash proceeds.