PPL Corporation (PPL) has announced public offerings of common stock and equity units to pay for its recently acquired Central Networks electricity distribution businesses in the United Kingdom. The offerings are being made under an effective shelf registration statement on file with the Securities and Exchange Commission.
In the first part of the offering, PPL Corp. said it will sell 80 million shares of its common stock to the public priced at $25.30 per share. Under the shares offering, the company has provided underwriters the option to buy an additional 12 million shares to cover over-allotments.
In the second part, PPL Corp. will sell 17 million equity units at a price of $50 per unit with a reference price of $25.30 per share, equivalent to the offered price of the concurrent common stock offering. This brings the aggregate value of the units offering to $850 million.
The company said the equity units will carry a total annual distribution rate of 8.75%. The threshold appreciation price for the equity units is $30.99, which represents a premium of about 22.5% over the reference price.
Under the equity offering, also, the underwriters will have the option to buy up to 2.55 million additional equity units or an additional aggregate stated amount of $127.5 million within 13 days from the initial issuance date of the equity units.
The equity units will initially consist of a contract to purchase PPL common stock and a 5% beneficial ownership interest in $1,000 principal amount of PPL Capital Funding Inc.’s 4.32% junior subordinated notes due 2019. Per the purchase contract, holders will be required to purchase a variable number of shares of PPL common stock no later than May 1, 2014.
PPL Corp. expects to issue the common stock and equity units, under the offering, on April 15, 2011. The proceeds of the offerings will be used mainly to pay off a portion of the GBP 3.6 billion Term Loan Facility taken to fund PPL’s recently completed GBP 4.1 billion acquisition of Central Networks.
Central Networks, which was acquired on April 03, 2011, currently operates as a part of PPL’s Western Power Distribution (WPD) business in the United Kingdom. The WPD is now doing business under the names WPD East Midlands and WPD West Midlands.
Headquartered in Allentown, Pennsylvania, PPL Corp., along with its subsidiaries, now provides regulated utility services to about 10 million customers in England, Wales, Pennsylvania, Kentucky, Virginia and Tennessee.
PPL Corp. is a diversified utility company, primarily generating energy from power plants, marketing wholesale or retail energy and delivering electricity to customers in Pennsylvania, Kentucky, Virginia, Tennessee and the U.K., while also supplying natural gas in Kentucky. The company owns or controls about 19,000 megawatts of generating capacity in the United States. The company primarily competes with FirstEnergy Corp. (FE) and Exelon Corp. (EXC).
We maintain our ‘Neutral’ recommendation on PPL shares. PPL Corp. currently has a short term Zacks #3 Rank (Hold).
EXELON CORP (EXC): Free Stock Analysis Report
FIRSTENERGY CP (FE): Free Stock Analysis Report
PPL CORP (PPL): Free Stock Analysis Report
Zacks Investment Research
