Entergy Corporation shares declined in early trading after the company announced the pricing of a follow-on equity offering. In pre-market activity on Wednesday, shares were down 3.6% to $113.10.
Late Tuesday the New Orleans-based electric utility disclosed that it had priced approximately 19.25 million shares at $113 apiece, generating about $2.175 billion in gross proceeds. The placement was set at a 3.7% discount to the most recent sale price prior to the transaction.
The company entered into two-year forward sales agreements with the deal's bookrunners - Wells Fargo, Citigroup, Barclays and Scotiabank - under which the actual issuance of the new shares and receipt of proceeds are deferred until the agreements are settled. Entergy said it intends to use net proceeds for general corporate purposes, specifically citing repayment of commercial paper, outstanding loans under its revolving credit facility, or other forms of debt.
According to the offering prospectus, Entergy had about 457.9 million shares outstanding as of May 1. Based on that share count and recent pricing, the filing put the company's market capitalization at approximately $54 billion.
The forward sale structure was highlighted in the company's disclosure as a mechanism to lock in current prices while postponing issuance and the inflow of proceeds until funding is required. Management noted that this approach avoids immediate dilution to earnings per share that would accompany an immediate secondary share issuance.
Details
- Shares priced: ~19.25 million
- Price per share: $113
- Gross proceeds: ~ $2.175 billion
- Discount to last sale price: 3.7%
- Forward sale tenor: two years
- Bookrunners: Wells Fargo, Citigroup, Barclays, Scotiabank
The market response was immediate, with the company's stock trading lower in pre-market hours following the announcement. The company publicly framed the transaction as a balance between securing capital at current market prices and retaining flexibility to draw on proceeds when needed without creating immediate dilution to existing shareholders.