01—Abstract
Summary
Summary of the 8-K filed May 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Sempra (SRE) announced on May 31, 2024, the successful closing of a public offering and sale of $500 milliona in aggregate principal amount of its 6.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2054.
This issuance is an additional tranche that will form a single series with the previously issued $600 millionb of similar notes from March 2024. The company received approximately $490.2 million in net proceeds after underwriting discounts, which will be used for general corporate purposes. The notes carry a fixed interest rate of 6.875% until October 1, 2029, after which the rate will reset every five years based on the Five-year U.S. Treasury Rate plus a spread of 2.789%.
A key feature of these junior subordinated notes is the company's option to defer interest payments for up to 20 consecutive semi-annual periods, subject to certain conditions. Sempra also retains the option to redeem the notes at par value under specific conditions, including after October 1, 2029, or upon certain specified events.
02—Key points
Key Highlights
- Sempra closed a $500 million public offering of 6.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2054.
- These new notes are a "reopening" issuance, joining the existing $600 million of similar notes issued in March 2024.
- Net proceeds from the offering are approximately $490.2 million, intended for general corporate purposes.
- The notes have a fixed rate of 6.875% until October 1, 2029.
- Post-October 2029, the interest rate will reset every five years based on a benchmark U.S. Treasury rate plus a 2.789% spread.
- Sempra has the option to defer interest payments for up to 20 consecutive semi-annual periods.
- The company can redeem the notes at par value on or after October 1, 2029, or upon the occurrence of specific events.
03—Questions
Frequently Asked Questions
What are the net proceeds from this offering and how will they be used?
Sempra received approximately $490.2 million in net proceeds after deducting underwriting discounts but before other offering expenses. These funds are intended for general corporate purposes.
What is the interest rate structure for these notes?
The notes carry a fixed interest rate of 6.875% per annum from issuance until October 1, 2029. From October 1, 2029, the rate will reset every five years to the prevailing Five-year U.S. Treasury Rate plus a spread of 2.789%.
Can Sempra skip interest payments on these notes?
Yes, as junior subordinated notes, Sempra has the option to defer interest payments for one or more periods, up to a maximum of 20 consecutive semi-annual interest payment periods, provided no event of default has occurred. These deferred payments will accrue interest and must be paid before the final maturity date.
When can Sempra redeem these notes?
Sempra can redeem the notes at its option starting 90 days before October 1, 2029, up to October 1, 2029, and on any interest payment date thereafter. The redemption price is 100% of the principal amount plus accrued interest. Redemption is also possible upon the occurrence of certain specified events.
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