Pinnacle West Capital Corp. (NYSE: PNW) (“Pinnacle West”)
announced the pricing of its offering of $475 million aggregate
principal amount of its 4.75% convertible senior notes due 2027
(the “convertible notes”) in a private placement under the
Securities Act of 1933, as amended (the “Securities Act”). The
offering of the convertible notes was upsized from the previously
announced offering size of $450 million aggregate principal amount
of convertible notes. Pinnacle West also granted the initial
purchasers of the convertible notes an option to purchase, within a
13-day period from, and including, the date on which the
convertible notes are first issued, up to an additional $50 million
aggregate principal amount of the convertible notes. The sale of
the convertible notes is expected to close on June 6, 2024, subject
to the satisfaction of customary closing conditions.
Pinnacle West expects that the net proceeds from the convertible
notes will be approximately $468 million (or $517.4 million if the
initial purchasers exercise their option to purchase additional
convertible notes in full), after deducting the initial purchasers’
discounts and commissions and estimated offering expenses payable
by Pinnacle West. Pinnacle West intends to use the net proceeds
from the offering of the convertible notes for general corporate
purposes, which may include repayment or refinancing of debt,
working capital and investments in its operating subsidiary,
Arizona Public Service Company.
The convertible notes will be senior unsecured obligations of
Pinnacle West, and will mature on June 15, 2027, unless earlier
converted or repurchased in accordance with their terms. The
convertible notes will bear interest at a fixed rate of 4.75% per
year, payable semiannually in arrears on June 15 and December 15 of
each year, beginning on December 15, 2024.
Prior to the close of business on the business day immediately
preceding March 15, 2027, the convertible notes will be convertible
at the option of the holders only under certain conditions.
On or after March 15, 2027, until the close of business on the
business day immediately preceding the maturity date, holders of
the convertible notes may convert all or any portion of their
convertible notes at their option at any time at the conversion
rate then in effect, irrespective of these conditions. Pinnacle
West will settle conversions of the convertible notes by paying
cash up to the aggregate principal amount of the convertible notes
to be converted and paying or delivering, as the case may be, cash,
shares of its common stock, no par value, or a combination of cash
and shares of its common stock, at its election, in respect of the
remainder, if any, of its conversion obligation in excess of the
aggregate principal amount of the convertible notes being
converted.
The conversion rate for the convertible notes will initially be
10.8338 shares of common stock per $1,000 principal amount of
convertible notes (equivalent to an initial conversion price of
approximately $92.30 per share of common stock). The initial
conversion price of the convertible notes represents a premium of
approximately 20% over the last reported sale price of Pinnacle
West’s common stock on The New York Stock Exchange on June 3, 2024.
The conversion rate and the corresponding conversion price will be
subject to adjustment in some events but will not be adjusted for
any accrued and unpaid interest. Pinnacle West may not redeem the
convertible notes prior to the maturity date.
If Pinnacle West undergoes a fundamental change (as defined in
the indenture that will govern the convertible notes), subject to
certain conditions, holders of the convertible notes may require
Pinnacle West to repurchase for cash all or any portion of their
convertible notes at a repurchase price equal to 100% of the
principal amount of the convertible notes to be repurchased, plus
accrued and unpaid interest to, but excluding, the fundamental
change repurchase date (as defined in the indenture that will
govern the convertible notes). In addition, if certain fundamental
changes occur, Pinnacle West may be required, in certain
circumstances, to increase the conversion rate for any convertible
notes converted in connection with such fundamental changes by a
specified number of shares of its common stock.
The offering is being made to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. Any offers of the convertible notes will be made
only by means of a private offering memorandum. None of the
convertible notes or any shares of the common stock issuable upon
conversion of the convertible notes have been or are expected to be
registered under the Securities Act or any state securities laws
and, unless so registered, may not be offered or sold in the United
States or to U.S. persons except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and applicable state securities laws.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor will there be
any sale of these securities in any state or jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
General Information
Pinnacle West Capital Corp., an energy holding company based in
Phoenix, has consolidated assets of nearly $25 billion, about 6,500
megawatts of generating capacity and approximately 6,100 employees
in Arizona and New Mexico. Through its principal subsidiary,
Arizona Public Service Company, the company provides retail
electricity service to approximately 1.4 million Arizona homes and
businesses.
FORWARD-LOOKING STATEMENTS
This press release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
concerning the timing and completion of the offering of the
convertible notes and the anticipated use of proceeds from the
offering. These forward-looking statements are often identified by
words such as “estimate,” “predict,” “may,” “believe,” “plan,”
“expect,” “require,” “intend,” “assume,” “project,” “anticipate,”
“goal,” “seek,” “strategy,” “likely,” “should,” “will,” “could,”
and similar words. Because actual results may differ materially
from expectations, we caution readers not to place undue reliance
on these statements. A number of factors could cause future results
to differ materially from historical results, or from outcomes
currently expected or sought by Pinnacle West or Arizona Public
Service Company (“APS”). These factors include, but are not limited
to, the factors discussed in the most recent Pinnacle West/APS Form
10-K and 10-Q along with other public filings with the Securities
and Exchange Commission, which readers should review carefully
before placing any reliance on our financial statements or
disclosures. Neither Pinnacle West nor APS assumes any obligation
to update these statements, even if our internal estimates change,
except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240604546627/en/
Media Contact: Alan Bunnell (602) 250-3376 Analyst Contact:
Amanda Ho (602) 250-3334
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