01—Abstract
Summary
Summary of the 8-K filed September 9, 2024. Cited figures are marked; the original filing is the authoritative source.
NiSource Inc. closed the sale of $500 milliona aggregate principal amount of its 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055 on September 9, 2024.
The offering was made under the company's Form S-3 registration statement (File No. 333-268084), with BofA Securities, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co, LLC and Wells Fargo Securities, LLC acting as underwriters under a Terms Agreement dated September 3, 2024. The notes bear interest at 6.375%b per annum from September 9, 2024 until March 31, 2035.
From March 31, 2035, the rate resets during each reset period to the five-year U.S. Treasury Rate plus a spread of 2.527%c. Interest is payable semi-annually on March 31 and September 30, beginning March 31, 2025, and the notes mature on March 31, 2055. The company may redeem the notes during specified periods and upon certain ratings or tax events, as described in the prospectus supplement.
The notes are junior subordinated obligations with an optional interest deferral feature. While no event of default is continuing, NiSource may defer interest for one or more periods of up to 20 consecutive semi-annual interest payment periods each.
During any deferral, the company is restricted from paying dividends on its common stock or other capital stock, redeeming capital stock, and paying on debt or guarantees that rank equally with or junior to the notes, subject to certain exceptions. The company intends to use the net proceeds for general corporate purposes, including financing capital expenditures, working capital and repaying existing indebtedness.
02—Key points
Key Highlights
- NiSource sold $500 million of 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055, with the sale closing on September 9, 2024.
- The notes carry a 6.375% fixed rate until March 31, 2035, then reset periodically to the five-year U.S. Treasury Rate plus 2.527%.
- Interest is payable semi-annually on March 31 and September 30, beginning March 31, 2025, and the notes mature March 31, 2055.
- The company may defer interest for up to 20 consecutive semi-annual periods per deferral, provided no event of default is continuing.
- During a deferral period, NiSource cannot pay common stock or other capital stock dividends, repurchase or redeem capital stock, or pay on pari passu or junior debt, subject to exceptions.
- Proceeds are earmarked for general corporate purposes, including capital expenditures, working capital and repayment of existing indebtedness.
- The notes were issued under a Subordinated Indenture dated May 16, 2024 with The Bank of New York Mellon, as supplemented by a Second Supplemental Indenture dated September 9, 2024.
03—Questions
Frequently Asked Questions
What are the key terms of the newly issued notes?
The notes are $500 million of 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due March 31, 2055. They pay 6.375% interest until March 31, 2035, then reset periodically to the five-year U.S. Treasury Rate plus 2.527%, with semi-annual interest payments on March 31 and September 30.
Can NiSource skip interest payments on these notes?
Yes, the company may defer interest, from time to time, for one or more deferral periods of up to 20 consecutive semi-annual interest payment periods each, as long as no event of default with respect to the notes has occurred and is continuing.
What restrictions apply if NiSource defers interest?
During a deferral, NiSource will not, with certain exceptions described in the prospectus supplement, declare or pay dividends on any capital stock including common stock, redeem or repurchase capital stock, pay principal or interest on debt that ranks equally with or junior to the notes, or make payments on guarantees ranking equally with or junior to the notes.
How will NiSource use the proceeds?
The company intends to use the net proceeds for general corporate purposes, including to finance capital expenditures, for working capital and to repay existing indebtedness.
Under which documents were the notes issued?
The notes were issued under the Subordinated Indenture dated May 16, 2024 between NiSource and The Bank of New York Mellon, as supplemented by the Second Supplemental Indenture dated September 9, 2024, and offered under the company's Form S-3 registration statement (File No. 333-268084) and prospectus supplement dated September 3, 2024.
04—Continue