Benzinga | Mar 18, 2021 05:37AM EDT

South Jersey Industries Priced Public Offering of 10.25M Shares of Common Stock at $22.25/Share

South Jersey Industries, Inc. (NYSE:SJI) (the "Company") today announced that on March 17, 2021 it priced a registered public offering of 10,250,000 shares of its common stock at $22.25 per share (the "Common Stock"), for total gross proceeds of approximately $228 million. Of the 10,250,000 shares in the offering, 362,359 will be sold directly by the Company to the underwriters at closing, and 9,887,641 will be subject to the forward sale agreement described below. In addition, the Company announced that on March 17, 2021 it priced a registered public offering of 6.0 million equity units (the "Equity Units") (aggregate stated amount of $300 million Equity Units), for total gross proceeds of approximately $300 million. The offerings (which are not conditioned on one another) are expected to close on or about March 22, 2021, subject to customary closing conditions.

The Company has granted the underwriters a 30-day option to purchase up to an additional 1,537,500 shares of its Common Stock, and an option to purchase, within a 13-day period beginning on, and including, the date on which the Equity Units are first issued, up to an additional 900,000 additional Equity Units, upon the same terms as their respective offerings.

In connection with the offering of shares of Common Stock, the Company entered into a forward sale agreement with an affiliate of BofA Securities (such affiliate, the "Forward Purchaser"), under which the Company has agreed to sell to the Forward Purchaser the same number of shares of Common Stock as are sold by an affiliate of the Forward Purchaser to the underwriters for sale in the underwritten public offering (subject to certain adjustments and to the Company's right, in certain circumstances, to elect cash settlement or net share settlement of the forward sale agreement). Subject to certain conditions, an affiliate of the Forward Purchaser is expected to borrow, and sell to the underwriters, 9,887,641 shares of Common Stock at the close of the Common Stock offering in connection with the forward sale agreement.

Settlement of the forward sale agreement will occur on one or more dates no later than approximately 12 months after the date of the prospectus supplement relating to the Common Stock offering. Upon any physical settlement of the forward sale agreement, the Company will issue and deliver to the Forward Purchaser shares of Common Stock in exchange for cash proceeds per share of Common Stock equal to the forward sale price, which will initially be the price of the Common Stock sold in the Common Stock offering, and will be subject to certain adjustments as provided in the forward sale agreement. The Company may, in certain circumstances, elect cash or net share settlement for all or a portion of its obligations under the forward sale agreement.

Each Equity Unit will be issued in a stated amount of $50 and will initially consist of a contract to purchase shares of our Common Stock and a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of the Company's 2021 Series B remarketable junior subordinated notes due 2029. Pursuant to the purchase contracts, holders are required to purchase Company Common Stock no later than April 1, 2024.

Total annual distribution on the Equity Units will be at the rate of 8.75%, consisting of quarterly interest payments on the remarketable senior notes at a rate of 1.65% per year and quarterly contract adjustment payments on the purchase contracts at a rate of 7.10% per year. The reference price for the Equity Units is $22.25 per share. The minimum settlement rate under the purchase contracts is 1.9125 shares of Common Stock, which is approximately equal to the $50 stated amount per Equity Unit, divided by the threshold appreciation price of $26.14375 per share, which represents a premium of 17.5% over the reference price. The maximum settlement rate under the purchase contracts is 2.2472 shares of Company common stock, which is approximately equal to the $50 stated amount per Equity Unit, divided by the reference price. Each of the settlement rates is subject to adjustment in certain circumstances.

The Company intends to use the proceeds from these offerings, which are expected to be approximately $510.5 million in the aggregate or approximately $587.1 million in the aggregate if the options to purchase additional shares of Common Stock and Equity Units are exercised in full (after deducting underwriting discounts and commissions and estimated offering expenses), for the repayment of indebtedness, capital expenditures primarily for regulated businesses, including infrastructure investments at our utility business, and general corporate purposes. The Company will not receive any proceeds from the sale of the Common Stock sold by an affiliate of the Forward Purchaser to the underwriters. The Company intends to use any net proceeds that it receives upon settlement of the forward sale agreement as described above.

BofA Securities is acting as lead bookrunner for the Common Stock offering, sole bookrunner for the Equity Units offering, and as the representative of the underwriters for both offerings. Guggenheim Securities is acting as joint bookrunner for the Common Stock offering and as joint lead manager for the Equity Units offering. J.P. Morgan is acting as lead manager for the Common Stock offering and as joint lead manager for the Equity Units offering. Janney Montgomery Scott, Morgan Stanley, PNC Capital Markets LLC, Siebert Williams Shank and Wells Fargo Securities are acting as co-managers for the Common Stock offering. KeyBanc Capital Markets, Morgan Stanley, PNC Capital Markets LLC, Wells Fargo Securities, Citizens Capital Markets and TD Securities are acting as co-managers for the Equity Units offering.