COLUMBUS, Ohio, Aug. 11, 2020 /PRNewswire/ -- American
Electric Power (NYSE: AEP) today announced that the company has
priced its offering of 15 million equity units or $750 million stated amount. The transaction is
expected to close Aug. 14, subject to
customary closing conditions.
Each equity unit will be issued in a stated amount of
$50 and will consist of a contract to
purchase AEP common stock in 2023 and a 1/20 undivided beneficial
ownership interest in an AEP junior subordinated debenture due 2025
to be issued in the principal amount of $1,000. Total annual distributions on the equity
units will be at the rate of 6.125%, consisting of interest on the
junior subordinated debentures and payments under the stock
purchase contracts. The threshold appreciation price for the equity
units is $99.95 per share, which
represents a premium of approximately 20 percent over the reference
price of $83.29. Under the purchase
contract, holders will be required to purchase a variable number of
shares of AEP stock no later than Aug. 15,
2023.
AEP has granted the underwriters an option to purchase up to 2
million additional equity units, or an additional aggregate stated
amount of $100 million during the
13-day period beginning on, and including, the initial issuance
date of the equity units.
AEP intends to use the net proceeds from the sale of the equity
units, which are projected to be approximately $732 million (after deducting the underwriting
discount and other offering expenses and without giving effect to
the option described above), to help fund the company's overall
capital expenditure plans, to repay debt or for other general
corporate purposes. Other than this offering, there are no changes
to AEP's existing financing plan.
J.P. Morgan Securities LLC and Mizuho Securities USA LLC are joint book-running managers for
the offering.
The offering is made under an effective shelf registration
statement filed with the U.S. Securities and Exchange Commission.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities law of any such jurisdiction. The offer may be made only
by means of a prospectus and the related prospectus supplement.
Copies of these documents may be obtained by contacting J.P. Morgan
Securities LLC by calling 1-866-803-9204, or by mail at J.P. Morgan
Securities LLC c/o Broadridge Financial Solutions, 1155 Long Island
Ave., Edgewood, NY 11717, or by
email at prospectus-eq_fi@jpmchase.com; Mizuho Securities
USA LLC by mail at Mizuho
Securities USA LLC, Attention:
Equity Syndicate Department, 1271 Avenue of the Americas, 3rd
Floor, New York, NY 10020,
Telephone: (866) 271-7403.
American Electric Power, based in Columbus, Ohio, is focused on building a
smarter energy infrastructure and delivering new technologies and
custom energy solutions to our customers. AEP's approximately
17,400 employees operate and maintain the nation's largest
electricity transmission system and nearly 221,000 miles of
distribution lines to efficiently deliver safe, reliable power to
nearly 5.5 million regulated customers in 11 states. AEP also is
one of the nation's largest electricity producers with
approximately 30,000 megawatts of diverse generating capacity,
including 5,200 megawatts of renewable energy. AEP's family of
companies includes utilities AEP Ohio, AEP Texas, Appalachian Power
(in Virginia and West Virginia), AEP Appalachian Power (in
Tennessee), Indiana Michigan
Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power
Company (in Arkansas, Louisiana and east Texas). AEP also owns AEP Energy, AEP Energy
Partners, AEP OnSite Partners and AEP Renewables, which provide
innovative competitive energy solutions nationwide.
This report made by American Electric Power contains
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Although AEP believes that its
expectations are based on reasonable assumptions, any such
statements may be influenced by factors that could cause actual
outcomes and results to differ materially from those projected.
Among the factors that could cause actual results to differ
materially from those in the forward-looking statements are:
changes in economic conditions, electric market demand and
demographic patterns in AEP service territories; the impact of
pandemics, including COVID-19, and any associated disruption of
AEP's business operations due to impacts on economic or market
conditions, electricity usage, employees, customers, service
providers, vendors and suppliers; inflationary or deflationary
interest rate trends; volatility in the financial markets,
particularly developments affecting the availability or cost of
capital to finance new capital projects and refinance existing
debt; the availability and cost of funds to finance working capital
and capital needs, particularly during periods when the time lag
between incurring costs and recovery is long and the costs are
material; decreased demand for electricity; weather conditions,
including storms and drought conditions, and the ability to recover
significant storm restoration costs; the cost of fuel and its
transportation, the creditworthiness and performance of fuel
suppliers and transporters and the cost of storing and disposing of
used fuel, including coal ash and spent nuclear fuel; the
availability of fuel and necessary generation capacity and the
performance of generation plants; the ability to recover fuel and
other energy costs through regulated or competitive electric rates;
the ability to build or acquire renewable generation, transmission
lines and facilities (including the ability to obtain any necessary
regulatory approvals and permits) when needed at acceptable prices
and terms and to recover those costs; new legislation, litigation
and government regulation, including oversight of nuclear
generation, energy commodity trading and new or heightened
requirements for reduced emissions of sulfur, nitrogen, mercury,
carbon, soot or particulate matter and other substances that could
impact the continued operation, cost recovery, and/or profitability
of the generation plants and related assets; evolving public
perception of the risks associated with fuels used before, during
and after the generation of electricity, including coal ash and
nuclear fuel; timing and resolution of pending and future rate
cases, negotiations and other regulatory decisions, including rate
or other recovery of new investments in generation, distribution
and transmission service, environmental compliance; resolution of
litigation; the ability to constrain operation and maintenance
costs; prices and demand for power generated and sold at wholesale;
changes in technology, particularly with respect to energy storage
and new, developing, alternative or distributed sources of
generation; the ability to recover through rates any remaining
unrecovered investment in generation units that may be retired
before the end of their previously projected useful lives;
volatility and changes in markets for coal and other energy-related
commodities, particularly changes in the price of natural gas;
changes in utility regulation and the allocation of costs within
regional transmission organizations, including ERCOT, PJM and SPP;
changes in the creditworthiness of the counterparties with
contractual arrangements, including participants in the energy
trading market; actions of rating agencies, including changes in
the ratings of debt; the impact of volatility in the capital
markets on the value of the investments held by the pension, other
postretirement benefit plans, captive insurance entity and nuclear
decommissioning trust and the impact of such volatility on future
funding requirements; accounting standards periodically issued by
accounting standard-setting bodies; other risks and unforeseen
events, including wars, the effects of terrorism (including
increased security costs), embargoes, naturally occurring and
human-caused fires, cyber security threats and other catastrophic
events; and the ability to attract and retain the requisite work
force and key personnel.
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SOURCE American Electric Power