8-KMaterial AgreementsOther EventsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Material Agreement (May 10, 2019)

Filed May 10, 2019For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) has entered into a Forward Sale Agreement with Wells Fargo Bank, National Association, for the potential sale of 5.8 million common shares. This agreement, dated May 7, 2019, allows Con Edison to receive proceeds potentially tied to the future market value of these shares, with settlement expected by December 28, 2020. The initial forward price per share is set at $84.83, subject to daily adjustments based on interest rates and expected dividends. The agreement primarily anticipates physical settlement where Con Edison will issue new shares. However, Con Edison has the option for cash or net share settlement under certain conditions. The Forward Purchaser can accelerate the agreement under specific circumstances, such as difficulties in borrowing shares or if Con Edison experiences changes impacting ownership regulations or financial stability. Such acceleration could lead to early settlement and potential dilution for existing shareholders if physical settlement is enforced.

Key Highlights

  • 1Con Edison entered into a Forward Sale Agreement for 5.8 million common shares.
  • 2The agreement is with Wells Fargo Bank, National Association, as the Forward Purchaser.
  • 3Settlement is expected by December 28, 2020, but can be earlier at Con Edison's option.
  • 4The initial forward price is $84.83 per share, subject to daily adjustments for interest rates and dividends.
  • 5The agreement can be physically settled by issuing new shares, or potentially cash/net share settled by Con Edison.
  • 6The Forward Purchaser has the right to accelerate settlement under specific conditions, which could impact Con Edison.
  • 7Potential for shareholder dilution exists if the agreement is physically settled due to acceleration events.

Frequently Asked Questions

The Forward Sale Agreement allows Con Edison to enter into an arrangement with Wells Fargo to potentially raise capital by agreeing to sell a specific number of its common shares at a future date. It provides flexibility in how the transaction is settled, offering potential benefits related to stock price movements.

The agreement is expected to settle by December 28, 2020. However, Con Edison has the option to settle earlier, in whole or in part, subject to certain conditions. The Forward Purchaser also has the right to accelerate the settlement.

The initial forward price is set at $84.83 per share. This price is subject to daily adjustments based on a floating interest rate factor (overnight bank funding rate minus a spread) and may decrease on certain dates due to expected dividends on Con Edison's common shares.

A key risk is the potential for dilution to existing shareholders if the Forward Sale Agreement is physically settled, meaning Con Edison issues new shares. This could be triggered by acceleration events initiated by the Forward Purchaser, which may not align with Con Edison's best interests, or in the event of Con Edison's bankruptcy or insolvency.