8-KOther EventsExhibits & Filings

SOUTHERN CO 8-K Report, Corporate Update (Sep 18, 2020)

Filed September 18, 2020For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company (SO) has announced the successful issuance and sale of two series of junior subordinated notes, raising a total of $2.0 billion in aggregate principal amount. Specifically, the company issued $1.25 billion in Series 2020B 4.00% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due January 15, 2051, and $750 million in Series 2020C 4.20% Junior Subordinated Notes due October 15, 2060. These issuances were conducted under the company's existing shelf registration statement. This debt offering indicates Southern Company's proactive approach to managing its capital structure and funding its operations or strategic initiatives. The significant capital raised suggests potential investments in infrastructure, renewable energy projects, or other growth opportunities, as well as a commitment to maintaining financial flexibility. Investors should note the long-term nature of these notes and their subordination, which implies a higher risk profile compared to senior debt but also offers a yield premium. Further details regarding the use of proceeds and their impact on the company's leverage ratios would be beneficial for a comprehensive understanding.

Key Highlights

  • 1Southern Company issued $1.25 billion of Series 2020B 4.00% Junior Subordinated Notes due 2051.
  • 2Southern Company issued $750 million of Series 2020C 4.20% Junior Subordinated Notes due 2060.
  • 3Total aggregate principal amount raised from the note issuances is $2.0 billion.
  • 4The notes were issued under the company's existing shelf registration statement (Registration No. 333-223128).
  • 5The company entered into underwriting agreements on September 15, 2020, with various major financial institutions.
  • 6The filing includes supplemental indentures and legal opinions related to the issuance of these notes.

Frequently Asked Questions

While the 8-K filing does not explicitly state the use of proceeds, raising $2.0 billion in debt typically supports capital expenditures, refinancing existing debt, or general corporate purposes. Investors should look for future communications or filings for specific details on how these funds will be utilized by Southern Company.

Junior subordinated notes rank below senior debt and other senior secured or unsecured obligations in the event of bankruptcy or liquidation. This means that in a liquidation scenario, holders of these notes would be paid only after all senior creditors have been satisfied. This higher risk is typically compensated by a higher interest rate compared to senior debt.

The 'Fixed-to-Fixed Reset Rate' indicates that these notes will initially bear a fixed interest rate of 4.00%. However, there will be a future reset date (as detailed in the full indenture) where the interest rate might be adjusted. Investors should review the specific terms in the supplemental indenture for details on when and how this rate reset will occur.

The underwriting agreements list several prominent financial institutions as representatives of the underwriters, including Wells Fargo Securities, LLC, Barclays Capital Inc., Citigroup Global Markets Inc., MUFG Securities Americas Inc., Truist Securities, Inc., BofA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, and RBC Capital Markets, LLC.