Summary
Sempra Energy (SRE) announced a significant share repurchase program through a Collared Accelerated Share Acquisition Program with Merrill Lynch International (MLI). The company plans to spend $1 billion to buy back its common stock, with the program set to begin on February 7, 2008, and potentially extend into the fourth quarter of 2008. This repurchase initiative is directly funded by the anticipated proceeds from the sale of Sempra's commodity-marketing businesses to a joint venture, which is expected to close in January 2008 following regulatory approval. The structure of the share repurchase involves an initial $1 billion prepayment to MLI on February 8, 2008. The actual number of shares repurchased will be determined by this prepayment amount divided by a price derived from the average volume-weighted trading prices over a specified valuation period, adjusted by a fixed discount. This mechanism is designed to acquire shares efficiently, with a substantial portion of the minimum number of shares expected to be delivered shortly after the prepayment. Investors should note that Sempra has the option to terminate this program if the sale of its commodity-marketing businesses does not close by February 5, 2008.
Key Highlights
- 1Sempra Energy is initiating a $1 billion share repurchase program using a Collared Accelerated Share Acquisition Program with Merrill Lynch International.
- 2The repurchase program is funded by proceeds from the upcoming sale of Sempra's commodity-marketing businesses to a joint venture.
- 3The sale of the commodity-marketing businesses is expected to close in January 2008, pending Federal Reserve Board approval.
- 4The share repurchase program is scheduled to commence on February 7, 2008, and could run through the fourth quarter of 2008.
- 5Sempra will prepay $1 billion to MLI on February 8, 2008, as the purchase price for shares acquired through a share forward transaction.
- 6The number of shares repurchased will be based on the $1 billion purchase price and the volume-weighted average trading prices during a valuation period, adjusted by a discount.
- 7Sempra has the option to terminate the repurchase program by February 5, 2008, if the commodity-marketing business sale has not been completed by then.