NextEra Energy Partners, LP announced the pricing of $500 million in aggregate principal amount of its 0% convertible senior notes due 2024 (the "notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The offering is expected to close on June 17, 2021, subject to customary closing conditions.
The notes will not bear regular interest, and the principal amount of the notes will not accrete. Holders may convert all or a portion of their notes at any time prior to their maturity date in principal amounts equal to $1,000 or an integral multiple thereof.
Upon conversion, NextEra Energy Partners will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, NextEra Energy Partners common units, or a combination of cash and common units, at NextEra Energy Partners' election, in respect of the remainder, if any, of NextEra Energy Partners' conversion obligation in excess of the aggregate principal amount of the notes being converted. The initial conversion rate represents an approximately 20% premium to the $75.42 per common unit closing price of NextEra Energy Partners common units on the New York Stock Exchange on June 14, 2021. The conversion rate is subject to adjustment in certain circumstances. The notes will mature on June 15, 2024, and will be fully and unconditionally guaranteed on a senior unsecured basis by NextEra Energy Operating Partners, LP, a direct subsidiary of NextEra Energy Partners.
In connection with the offering of the notes, NextEra Energy Partners has entered into capped call transactions with certain financial institutions with a lower strike price of $90.5043 and a cap price of $113.1300, in each case per unit of NextEra Energy Partners common units. If, upon conversion of the notes, the price per unit of NextEra Energy Partners common units during the relevant valuation period is above the lower strike price of $90.5043, the capped call transactions are expected to generally result in a payment to NextEra Energy Partners (if the partnership elects to cash settle) or to reduce the potential dilution to NextEra Energy Partners common units (if the partnership elects to settle in NextEra Energy Partners common units).
NextEra Energy Partners estimates the net proceeds from the notes offering prior to offering expenses will be approximately $498.6 million. NextEra Energy Partners intends to use the net proceeds from this offering to fund a portion of its previously announced acquisition of a 391-megawatt portfolio of wind projects, as well as to pay the initial cost of the capped call transactions described above. Any proceeds not immediately used for these purposes may temporarily be invested in short-term instruments or used for general partnership purposes.
The offer and sale of notes, the guarantee and NextEra Energy Partners common units, if any, issuable upon conversion of the notes have not been registered under the Securities Act or the securities laws of any other jurisdiction. Accordingly, the notes are being offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The notes, the guarantee and NextEra Energy Partners common units issuable upon conversion of the notes are not transferable absent registration or an applicable exemption from the registration requirements of the Securities Act. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such jurisdiction.