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ATLANTA - Southern Company (NYSE: SO), a $99.9 billion market cap utility giant with a "GOOD" financial health rating according to InvestingPro, has upsized its offering of convertible senior notes to $1.45 billion, an increase of $200 million over the initial announcement. The private placement, aimed at qualified institutional buyers, will close on May 23, 2025, subject to standard closing conditions.
The Series 2025A 3.25% Convertible Senior Notes, maturing on June 15, 2028, will pay interest semiannually. Initially, the notes can be converted into Southern Company common stock at a rate of 8.8077 shares per $1,000 principal amount, which is about a 25% premium over the stock’s last sale price as of May 20, 2025. The company’s stock has shown strong momentum, gaining 7.9% in the past week and trading near its 52-week high of $94.45.
Conversion of the notes is restricted to certain events and periods before March 15, 2028, after which they can be converted at any time until two days before they mature. Upon conversion, the company may choose to pay in cash, stock, or a mix of both.
Southern Company anticipates net proceeds of around $1.44 billion, or $1.63 billion if the option for additional notes is fully exercised. The funds will primarily be used to repurchase existing convertible notes and to pay down commercial paper borrowings, with the remainder for general corporate purposes.
The company has also engaged in privately negotiated transactions to repurchase parts of its existing convertible notes using the proceeds from this offering. The repurchase transactions’ terms were individually negotiated, and no guarantee is provided for further repurchases post-offering.
Market activities by note holders, such as unwinding derivatives or stock transactions, could influence Southern Company’s common stock price. The securities offered have not been registered under the Securities Act and are subject to market conditions and other factors.
Southern Company, a leading energy provider, serves 9 million customers and operates across various states with a portfolio that includes electric and natural gas companies, as well as other energy-related businesses. The company has maintained dividend payments for 55 consecutive years and raised them for 23 straight years, demonstrating remarkable financial stability. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of this and 1,400+ other US stocks.
The information in this article is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Southern Company reported its first-quarter earnings for 2025, exceeding expectations with an adjusted earnings per share (EPS) of $1.23, surpassing the forecast of $1.19. The company also reported revenue of $7.78 billion, which was higher than the projected $7.31 billion. Southern Company confirmed its financial guidance for the year, with investments in state-regulated utilities and favorable weather conditions being key performance drivers. Despite a 0.3% year-over-year decrease in retail electricity sales, data center sales rose by 11%, contributing positively to the company’s performance. Analyst Andrew Weisel from Scotiabank reaffirmed a Sector Outperform rating on Southern Company, maintaining a price target of $98.00. He noted the company’s consistent earnings growth and strategic positioning to capitalize on data center and domestic manufacturing growth. Additionally, the company has been proactive in addressing its equity needs and managing tariff exposure, estimated to impact only 1%-3% of its capital expenditure plan. Looking ahead, Southern Company estimates its Q2 2025 adjusted EPS to be $0.85 per share and maintains its long-term EPS growth target of 5-7%.
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