Duke Energy Corporation announced on Mar. 10 the pricing of its offering of $1.3 billion aggregate principal amount of 3.000% convertible senior notes due 2029 in a private placement under the Securities Act of 1933. The company increased the size of the offering from the previously announced $1 billion and granted initial purchasers an option to buy up to an additional $200 million within a 13-day period beginning on the issuance date. The sale is expected to close on March 12, subject to customary closing conditions.
The announcement is significant as it outlines Duke Energy’s strategy for managing its debt and funding general corporate purposes, including repaying at maturity $1.725 billion in outstanding convertible senior notes due April 15, 2026. The net proceeds from this new offering are expected to be approximately $1.29 billion, or up to $1.48 billion if all options are exercised.
The new convertible notes will mature on March 15, 2029, unless converted or repurchased earlier according to their terms. They will bear interest at a fixed rate of 3% per year, payable semiannually starting September 15, 2026. Holders may convert their notes under certain conditions before December 15, 2028; after that date and until just before maturity, conversion can occur at any time at the prevailing rate.
Conversions will be settled by Duke Energy through cash payments up to the principal amount and either cash, shares of common stock, or a combination for any excess obligation. The initial conversion rate is set at approximately six shares per $1,000 principal amount (equivalent to a conversion price around $160 per share), representing a premium over Duke Energy’s last reported share price on March 9.
If Duke Energy undergoes a fundamental change as defined in the indenture governing these notes, holders may require repurchase for cash equal to principal plus accrued interest; in some cases involving such changes, Duke Energy may also increase the conversion rate for affected conversions.
The company said many holders of its existing convertible notes use arbitrage strategies that could affect trading activity and potentially influence Duke Energy’s stock price during observation periods related to note conversions.
This private offering targets qualified institutional buyers under Rule 144A and does not constitute an offer or solicitation in jurisdictions where such actions would be unlawful prior to registration or qualification under local securities laws.
