Summary
Sempra Energy (SRE) announced on January 12, 2018, the successful closing of a significant public offering of $5.5 billion in aggregate principal amount of various notes. This offering included both floating rate notes and fixed-rate notes with maturities ranging from 2019 to 2048. The primary purpose of this capital raise was to finance a portion of the costs associated with Sempra's proposed merger with Energy Future Holdings Corp. and to cover associated fees and expenses. This substantial debt issuance diversifies Sempra's debt profile and provides crucial funding for a major strategic initiative. Investors should note the conditions attached to the use of proceeds and the potential for mandatory redemption of certain notes if the merger is not consummated by December 1, 2018. The company has outlined specific redemption terms and alternative uses for proceeds should the merger not proceed.
Key Highlights
- 1Sempra Energy closed a public offering of $5.5 billion in notes on January 12, 2018.
- 2The offering comprised several tranches of floating rate and fixed-rate notes with maturities from 2019 to 2048.
- 3Net proceeds are intended to fund a portion of the proposed merger with Energy Future Holdings Corp. and related expenses.
- 4A special mandatory redemption clause exists for most notes (excluding 2028 Notes) if the merger is not completed or terminated by December 1, 2018, at a redemption price of 101% of principal plus accrued interest.
- 5The 2019 Floating Rate Notes bear interest at 3-month LIBOR plus 25 basis points, resetting quarterly.
- 6Fixed-rate notes range from 2.400% (2020 Notes) to 4.000% (2048 Notes).
- 7The issuance was registered under Sempra's Form S-3 Registration Statement.