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Southern Company announces upsize and pricing of $725 million in aggregate principal amount of Series 2026A 2.125% Convertible Senior Notes due December 15, 2027 and $1.65 billion in aggregate principal amount of Series 2026B 3.50% Convertible Senior Notes due September 15, 2029

SO
  • Southern Company priced $725 million in Series 2026A 2.125% Convertible Senior Notes due Dec 15, 2027, & $1.65 billion in Series 2026B 3.50% Convertible Senior Notes due Sep 15, 2029, via private placements to qualified institutional buyers under Rule 144A.
  • The offering sizes were upsized by $75 million for Series 2026A notes & $150 million for Series 2026B notes compared to previous announcements.
  • Initial purchasers received options to buy an additional $108.75 million of Series 2026A notes & $247.5 million of Series 2026B notes within 13 days of issuance.
  • The offerings are expected to close on Aug 6, 2026, subject to customary closing conditions.
  • Interest will be paid semiannually at 2.125% per annum for Series 2026A notes & 3.50% per annum for Series 2026B notes.
  • Series 2026A notes have an initial conversion rate of 9.5641 shares per $1,000 principal (approx. $104.56/share price) representing a 12.5% premium over the Aug 3, 2026 stock price.
  • Series 2026B notes have an initial conversion rate of 8.4389 shares per $1,000 principal (approx. $118.50/share price) representing a 27.5% premium over the Aug 3, 2026 stock price.
  • Conversion is restricted prior to Sep 15, 2027 (Series 2026A) or Jun 15, 2029 (Series 2026B), after which notes may be converted until the second trading day before maturity.
  • Upon conversion, Southern Company will pay cash up to the principal amount & may elect to pay the remainder in cash, shares, or a combination.
  • Estimated net proceeds are $721 million for Series 2026A ($829 million if options fully exercised) & $1.63 billion for Series 2026B ($1.88 billion if options fully exercised).
  • Southern Company intends to use approx. $403 million of net proceeds to repurchase $369 million of its Series 2024A Convertible Senior Notes through individually negotiated transactions.
  • Remaining net proceeds will be used to repay short-term debt & fund general corporate purposes, including investments in subsidiaries.
  • Note repurchase terms were individually negotiated based on factors including the market price of common stock & trading price of Series 2024A notes at the time.
  • Southern Company anticipates that sellers of Series 2024A notes may unwind convertible arbitrage strategies, potentially impacting the market price of common stock or the new Convertible Notes.
  • The securities were not registered under the Securities Act & may not be offered or sold without registration or an applicable exemption.