8-KMaterial AgreementsOther EventsExhibits & Filings

XCEL ENERGY INC 8-K Report, Material Agreement (Nov 4, 2019)

Filed November 4, 2019For Securities:XELXELLL

Summary

Xcel Energy Inc. (XEL) has entered into forward sale agreements with Citibank, N.A. for a total of 11,845,000 shares of its common stock. These agreements, initiated on October 30, 2019, and expanded on November 1, 2019, involve selling shares initially priced at $62.69, subject to adjustments. The company has the flexibility to settle these agreements through physical share issuance, net share settlement, or cash settlement, with settlement dates to be determined by Xcel Energy on or before December 31, 2020. This transaction is structured such that shares were borrowed from third parties and sold by Citigroup Global Markets Inc. (acting as Forward Seller and Underwriter) to the public. The forward sale agreements provide Xcel Energy with potential dilution in earnings per share if new shares are issued. Conversely, cash or net share settlements may involve repurchases, with potential financial implications depending on the stock's market value relative to the forward sale price. The filing also outlines specific circumstances under which Citibank, N.A. (as Forward Purchaser) could accelerate the settlement of these agreements.

Key Highlights

  • 1Xcel Energy entered into forward sale agreements for 11,845,000 shares of common stock.
  • 2The initial forward sale price is set at $62.69 per share, subject to daily adjustments.
  • 3Settlement is expected by December 31, 2020, at Xcel Energy's discretion.
  • 4Xcel Energy has flexibility in settlement methods: physical issuance, net share settlement, or cash settlement.
  • 5Physical settlement or net share settlement could result in dilution of earnings per share.
  • 6The Forward Purchaser (Citibank, N.A.) has the right to accelerate settlement under certain conditions, such as hedging difficulties, significant dividends, changes in ownership, extraordinary events (like mergers), or events of default.
  • 7The shares were sold to the public via an underwriter (Citigroup Global Markets Inc.), with the shares initially borrowed from third parties.

Frequently Asked Questions

These forward sale agreements allow Xcel Energy to sell a significant number of its common shares at a predetermined price, with settlement occurring at a future date. This can provide the company with capital while offering flexibility in how the shares are ultimately delivered or settled.

If Xcel Energy chooses to physically settle the agreements by issuing new shares, it could lead to dilution of earnings per share and ownership for existing shareholders. The exact impact depends on the settlement method chosen and the company's future stock performance.

Risks include potential dilution if new shares are issued, and the possibility of accelerated settlement by the Forward Purchaser under specific adverse conditions for Xcel Energy or its stock. The adjustment mechanism for the forward sale price also introduces variability.

Xcel Energy has the discretion to choose the settlement date or dates on or before December 31, 2020. The specific settlement method (physical, net share, or cash) will also be determined by Xcel Energy, with certain rights reserved for the Forward Purchaser to accelerate settlement.