Benzinga | Apr 12, 2021 04:59PM EDT

NiSource To Sell 7.5M Equity Units

NiSource Inc. (NYSE:NI) ("NiSource") announced today its intention to offer to sell, subject to market and other conditions, 7,500,000 Equity Units, each with a stated amount of $100. Each Equity Unit will initially be in the form of a Corporate Unit consisting of a contract to purchase shares of NiSource common stock (the "Common Stock") in the future and a 1/10th, or 10%, undivided beneficial ownership interest in one share of Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share (the "Mandatory Convertible Preferred Stock"). NiSource expects to grant the underwriters an option to purchase 1,125,000 additional Corporate Units to cover over-allotments. In addition, NiSource has updated its financing strategy for 2021-2024:



The offering is expected to satisfy all anticipated discrete equity needs of NiSource through 2024 (except for issuances under its existing programmatic ATM program) and eliminates the need for the discrete (block) equity issuance NiSource originally planned for calendar years 2022 or 2023.

Further Details of Equity Units Offering:

Pursuant to the offering, the Common Stock is expected to be delivered upon settlement of the purchase contracts on December 1, 2023 (subject to early settlement in certain circumstances).

NiSource expects to pay, quarterly in arrears, contract adjustment payments on the stated amount of each Equity Unit at a rate to be determined in connection with the offering. NiSource may pay such contract adjustment payments in cash, shares of Common Stock or a combination of cash and shares of Common Stock, at its election. NiSource may also, in its discretion, defer contract adjustment payments.

The Mandatory Convertible Preferred Stock is expected to be remarketed either as part of an optional remarketing elected by us or during a final remarketing period. Following any successful remarketing, dividends may become payable on the Mandatory Convertible Preferred Stock and/or the minimum conversion rate of the Mandatory Convertible Preferred Stock may be increased. The Mandatory Convertible Preferred Stock initially will not bear any dividends and the liquidation preference of the Mandatory Convertible Preferred Stock will not accrete.

Each share of Mandatory Convertible Preferred Stock may be converted only after being separated from the Corporate Units and, prior to December 1, 2023, only upon the occurrence of certain fundamental change events (unless a remarketing failure as described below has previously occurred).

Each share of Mandatory Convertible Preferred Stock, unless previously converted, will automatically convert on the mandatory conversion date (which is expected to be on or about March 1, 2024) into a variable number of shares of Common Stock as determined in the offering. However, if no successful remarketing of the Mandatory Convertible Preferred Stock has previously occurred, effective as of December 1, 2023, the conversion rate will be zero, no shares of Common Stock will be delivered upon automatic conversion and each share of Mandatory Convertible Preferred Stock will be automatically transferred to NiSource on the mandatory conversion date without any payment of cash or shares of the Common Stock thereon. In the event of such a remarketing failure, any shares of Mandatory Convertible Preferred Stock held as part of Corporate Units will be automatically delivered to NiSource on December 1, 2023 in full satisfaction of the relevant holder's obligation under the related purchase contracts.

NiSource intends to use the net proceeds from the offering for renewable generation investments and general corporate purposes, including additions to working capital and repayment of existing indebtedness. The offering is consistent with NiSource meeting its near and long-term financial plan. The Equity Unit structure of this offering allows NiSource to retain share price upside while aligning the expected proceeds with its renewable investment needs. Concurrently, NiSource expects to have a renewable capital expenditure requirement of approximately $2.0 billion.

NiSource intends to apply to list the Corporate Units on the New York Stock Exchange under the symbol "NIMC."

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers for this offering.