Duke Energy Corporation announced on Mar. 10 the pricing of its offering of $1.3 billion aggregate principal amount of 3.000% convertible senior notes due 2029 in a private placement under the Securities Act of 1933. The company increased the size of the offering from the previously announced $1 billion and granted initial purchasers an option to buy up to an additional $200 million within a 13-day period beginning on the issuance date. The sale is expected to close on March 12, subject to customary closing conditions.
The proceeds from this offering are expected to be approximately $1.29 billion, or up to $1.48 billion if the option for additional notes is fully exercised, after deducting discounts, commissions, and expenses. Duke Energy said it intends to use these funds primarily to repay at maturity its outstanding $1.725 billion aggregate principal amount of existing 4.125% Convertible Senior Notes due April 15, 2026, as well as for general corporate purposes.
The new convertible notes will mature on March 15, 2029, unless converted or repurchased earlier according to their terms. They will bear interest at a fixed rate of 3% per year, payable semiannually starting September 15, 2026. Holders may convert their notes under certain conditions before December 15, 2028; after that date and until shortly before maturity, conversion can occur at any time at the prevailing rate.
The initial conversion rate is set at approximately 6.2277 shares per $1,000 principal amount (about $160.57 per share), representing a premium of roughly 22.5% over Duke Energy’s last reported share price on March 9, with adjustments possible in some events but not for accrued interest.
If Duke Energy undergoes a fundamental change as defined in the indenture governing these notes, holders may require repurchase for cash equal to principal plus accrued interest; certain changes could also trigger an increase in conversion rate for conversions related to such events.
Duke Energy noted that many holders of its existing convertible notes employ arbitrage strategies involving short positions in its common stock that may be closed around note maturity and conversions—activity which could affect market prices during this period.
This private offering targets qualified institutional buyers under Rule 144A and is not registered under U.S. securities laws; thus it cannot be offered or sold publicly without registration or exemption.
