Summary
Kinder Morgan, Inc. (KMI) filed an 8-K on October 23, 2018, to announce the upcoming mandatory conversion of its 9.75% Series A Mandatory Convertible Preferred Stock into common stock. This conversion is set to occur on October 26, 2018, at a predetermined rate of 36.2840 shares of common stock for each share of preferred stock, or 1.8142 shares of common stock per depository share. This event will result in the issuance of approximately 58 million new shares of KMI common stock. This conversion has several implications for investors. Firstly, it will increase the total number of outstanding common shares, which could potentially dilute existing shareholders' ownership percentages. Secondly, holders of the preferred stock will transition to common stock ownership, aligning their interests more directly with common shareholders. The filing also clarifies dividend payments, noting that the final dividend on the preferred stock will be paid on October 26, 2018, and common shareholders are set to receive a $0.20 per share dividend on November 15, 2018. Holders who transition from preferred to common stock and maintain common stock ownership through the record dates will receive both dividends.
Key Highlights
- 1Mandatory conversion of 9.75% Series A Mandatory Convertible Preferred Stock into common stock on October 26, 2018.
- 2Conversion rate set at 36.2840 shares of common stock per preferred share (or 1.8142 shares per depository share).
- 3Approximately 58 million shares of common stock will be issued as a result of the conversion.
- 4Potential for dilution of existing common stock ownership due to the issuance of new shares.
- 5Final dividend on preferred stock to be paid on October 26, 2018.
- 6Common stock dividend of $0.20 per share to be paid on November 15, 2018.
- 7Holders transitioning from preferred to common stock and meeting record dates may receive both preferred and common stock dividends.