Summary
Southern Company (SO) announced the completion of a significant transaction involving its international leveraged lease projects. On December 13, 2021, a subsidiary successfully terminated its leasehold interest in assets related to two international leveraged lease projects. This termination was facilitated by the accelerated exercise of lessee purchase options, resulting in the receipt of substantial cash proceeds totaling $672.5 million. This transaction is expected to generate a preliminary pre-tax gain of approximately $93 million, which translates to a post-tax gain of roughly $100 million. Importantly, Southern Company has stated that it will exclude this gain from its reported 2021 adjusted earnings. Investors should note this as it impacts the understanding of the company's core operational performance versus one-time financial events.
Key Highlights
- 1Southern Company's subsidiary completed the termination of leasehold interests in two international leveraged lease projects.
- 2The termination resulted in the receipt of $672.5 million in cash proceeds.
- 3The accelerated exercise of lessee purchase options was the mechanism for termination.
- 4A preliminary pre-tax gain of approximately $93 million is associated with this transaction.
- 5The estimated after-tax gain is approximately $100 million.
- 6Southern Company will exclude this gain when presenting its 2021 adjusted earnings.