NextEra Energy Inc. (NEE) announced that it will sell 13 million equity units of $50 each amounting to $650 million. The net proceed from the issue, after underwriting expenses and offering expenses, is expected to be $630 million and will be added to the general funds of NextEra Energy Capital Holdings.
The contract stipulates that equity unitholders will have to purchase NextEra Energy common stock within September 1, 2015, and will receive a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings, Inc. debenture due September 1, 2017, to be issued in the principal amount of $1,000. The debentures will be guaranteed by NextEra Energy Capital Holdings' parent company, NextEra Energy, Inc.
The company from time to time issues equity units to meet its financial needs. On May 1, 2012, the company had issued equity units worth $600 million. We believe NextEra Energy is in urgent need of funds because of its aggressive long-term growth strategy. The capital raised will be used to modernize plants and augment the smart grid initiative of the company. Besides, the company is also investing heavily to increase its renewable energy generation form solar and wind resources.
The debt-to-capital ratio of the company at the end of the second quarter was 57.8%, up nominally from 57.5% at the end of the preceding quarter. The ratio is also higher than the peer group average of 42.7%. However, we believe NextEra’s financial strength and positive contribution from the new projects will allow it to service its debts.
NextEra Energy expects full-year 2012 adjusted earnings per share in the range of $4.35 to $4.65. The new capital investments are expected to aid in earnings growth, going forward. The Zacks Consensus Estimate for 2012 is $4.53 per share.
NextEra Energy currently retains a Zacks #3 Rank which translates into a short-term Hold rating. The company competes with Southern Company (SO).
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida.
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