What is the primary purpose of this transaction for NextEra Energy?

The primary purpose appears to be to raise capital by effectively selling shares at a predetermined price via a forward sale agreement, while retaining flexibility on the exact settlement method (physical shares, cash, or net share settlement) until a later date.

What is the forward sale agreement and how does it work?

The forward sale agreement is a contract where NEE agreed to deliver 6.6 million shares of its common stock to the forward counterparty (Citibank, N.A.) by December 31, 2014. NEE can choose to deliver the actual shares, settle with cash based on market prices, or use net share settlement. The initial price is $88.03 per share, but this can be adjusted.

What is the settlement price for the forward sale agreement?

The initial forward sale price is $88.03 per share. However, this price is subject to adjustment. If NEE settles physically, they will receive cash at this forward sale price. If NEE opts for cash or net share settlement, the price will be compared to an average market price around the settlement date, and a differential may be paid or received in cash or shares.

Are there any risks associated with this forward sale agreement?

Yes, potential risks include the forward counterparty accelerating the agreement and requiring physical settlement, and NEE potentially having to settle at a disadvantage if market prices move unfavorably relative to the forward sale price at settlement, especially if cash or net share settlement is chosen.

NEXTERA ENERGY INC 8-K SEC Disclosure

Summary

NextEra Energy, Inc. (NEE) has filed an 8-K detailing a transaction involving the sale of common stock. On November 22, 2013, the company sold 4.5 million shares of its common stock to underwriters. Concurrently, NEE entered into a forward sale agreement with Citibank, N.A. as the forward counterparty, under which 6.6 million shares were borrowed and sold to the underwriters. This structure effectively allows NEE to receive proceeds from these shares upfront, with an obligation to deliver actual shares or their cash equivalent by December 31, 2014. The initial forward sale price was set at $88.03 per share, subject to adjustments.

Key Highlights

1NESTARA ENERGY INC (NEE) entered into a forward sale agreement with Citibank, N.A. as forward counterparty.
2The company sold 4,500,000 shares of its common stock to underwriters.
36,600,000 shares of NEE's common stock were borrowed and sold to underwriters in connection with the forward sale agreement.
4The forward sale agreement allows NEE to deliver shares or settle in cash or net shares by December 31, 2014.
5The initial forward sale price was set at $88.03 per share, subject to adjustment.
6The forward sale agreement may be accelerated by the counterparty under certain circumstances.
7The shares involved were registered under the Securities Act of 1933.

NEXTERA ENERGY INC 8-K Report, Corporate Update (Nov 22, 2013)

Summary

Key Highlights

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