AEP Announces Pricing of Equity Units

Source Press Release
Company American Electric Power 
Tags Equity Financing, Financing
Date March 14, 2019

American Electric Power (NYSE: AEP) today announced that it has priced its offering of 14 million equity units or $700 million stated amount. The transaction is expected to close March 19, 2019, subject to customary closing conditions.

Each equity unit will be issued in a stated amount of $50 and will consist of a contract to purchase AEP commonstock in 2022 and a 1/20 undivided beneficial ownership interest in an AEP junior subordinated debenture due 2024 to be issued in the principal amount of $1,000. Total annual distributions on the equity units will be at the rate of 6.125 percent, consisting of interest on the junior subordinated debentures and payments under the stock purchasecontracts. The threshold appreciation price for the equity units is $99.58 per share, which represents a premium of approximately 20 percent over the reference price. Under the purchase contract, holders will be required to purchasea variable number of shares of AEP stock no later than March 15, 2022.

AEP has granted the underwriters an option to purchase during the 13-day period beginning on, and including, the initial issuance date of the equity units up to 2.1 million additional equity units, or an additional aggregate stated amount of $105 million.

AEP intends to use the net proceeds from the sale of the equity units, which are projected to be $682 million (after deducting the underwriting discount and other offering expenses and without giving effect to the option described above) to help fund the company's overall capital expenditure plans, including the recently announced contracted renewables portfolio, and to address planned equity needs in connection with the company's existing capital expenditure plans through 2021, exclusive of the dividend reinvestment plan.

Barclays, Morgan Stanley and Wells Fargo Securities are joint book-running managers for the offering.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd