FirstEnergy Announces Proposed Offering of $950 Million of Convertible Senior Notes Due 2029 and $850 Million of Convertible Senior Notes Due 2031

Rhea-AI Summary

FirstEnergy Corp. (NYSE: FE) has announced plans to offer $1.8 billion in convertible senior notes through a private placement, consisting of $950 million notes due 2029 and $850 million due 2031. The company will grant initial purchasers options to buy additional notes worth $150 million for each series. The proceeds will primarily be used to repurchase $1.5 billion of existing 4.00% convertible notes due 2026, repay other debt, and for general corporate purposes. The notes will be unsecured, unsubordinated, and convertible to cash or a combination of cash and common stock. The offering is exclusively available to qualified institutional buyers under Rule 144A of the Securities Act.

Positive

• Large offering size of $1.8 billion provides significant financial flexibility
• Strategic refinancing of existing debt could potentially improve debt structure
• Flexibility in settlement options through cash or combination of cash and stock
• Additional $300 million potential funding through purchaser options

Negative

• Potential dilution for existing shareholders if notes are converted to stock
• Increased debt burden with two new series of convertible notes
• Uncertainty in final terms as interest rates and conversion rates are yet to be determined

Insights

Corporate Finance Specialist

FirstEnergy's $1.8B convertible notes offering primarily aims to refinance existing debt and extend maturity profile through 2031.

FirstEnergy has announced plans to raise $1.8 billion through convertible senior notes in two separate offerings - $950 million due 2029 and $850 million due 2031. The company is also granting options to purchase up to an additional $300 million in notes to initial purchasers. This appears to be primarily a refinancing maneuver, as the proceeds will largely go toward repurchasing all or part of FirstEnergy's existing $1.5 billion in convertible notes that mature in 2026.

This transaction represents a strategic liability management exercise that extends FirstEnergy's debt maturity profile by replacing obligations due in 2026 with new maturities in 2029 and 2031. The structure of these convertible notes gives FirstEnergy flexibility in how it handles any future conversions - they can pay cash for the principal amount and then use cash, stock, or a combination for any conversion value above principal.

The private placement to qualified institutional buyers under Rule 144A is standard practice for this type of offering and allows for a streamlined issuance process. While the press release doesn't specify the interest rates or conversion terms, these will be determined during pricing based on market conditions.

The offering's size exceeding the 2026 notes suggests FirstEnergy may be raising additional capital beyond simple refinancing. This proactive approach to addressing upcoming maturities well in advance typically reduces refinancing risk and provides greater financial flexibility. However, without specific terms, we can't yet determine if this will ultimately increase or decrease their interest expense or the potential dilutive impact.

AKRON, Ohio, June 9, 2025 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) ("FirstEnergy") announced today that it intends to offer, subject to market and other conditions, $950 million aggregate principal amount of convertible senior notes due 2029 (such series, the "2029 Notes") and $850 million aggregate principal amount of convertible senior notes due 2031 (such series, the "2031 Notes" and, together with the 2029 Notes, the "Notes") in a private placement under the Securities Act of 1933, as amended (the "Securities Act"). FirstEnergy also intends to grant to each of the initial purchasers of the Notes an option to purchase, within a 13-day period from, and including, the date on which the convertible notes are first issued, up to an additional $150 million aggregate principal amount of the 2029 Notes and an additional $150 million aggregate principal amount of the 2031 Notes.

FirstEnergy intends to use the net proceeds from the offering of the Notes for (i) the repurchase of all or a portion of the $1.5 billion aggregate principal amount outstanding of its 4.00% convertible senior notes due May 1, 2026, (ii) the repayment, redemption or refinancing of existing indebtedness, (iii) general corporate purposes, or (iv) any combination of the foregoing. FirstEnergy's management will have broad discretion in determining how the net proceeds from the offering will be used.

The Notes will be unsecured and unsubordinated obligations of FirstEnergy, and will be convertible at the option of the holders of each series of Notes upon satisfaction of certain conditions and during certain periods. Interest will be payable semiannually in arrears. FirstEnergy will settle conversions of the Notes by paying cash up to the aggregate principal amount of the convertible notes to be converted and paying or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted. The interest rate, initial conversion rate and other terms of each series of Notes will be determined at the pricing of the offering.

The offering is being made to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. Any offers of the Notes will be made only by means of a private offering memorandum. None of the Notes or any shares of the common stock issuable upon conversion of the Notes have been or are expected to be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

This news release does not constitute an offer to sell or the solicitation of an offer to buy the Notes or any shares of common stock issuable upon conversion of the Notes, nor will there be any sale of the Notes or any such shares in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About FirstEnergy Corp.

FirstEnergy is dedicated to integrity, safety, reliability and operational excellence. Its electric distribution companies form one of the nation's largest investor-owned electric systems, serving more than 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. The company's transmission subsidiaries operate approximately 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions. Follow FirstEnergy online at www.firstenergycorp.com and on X @FirstEnergyCorp. 

Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management and unless the context requires otherwise, references to "we," "us," "our" and "FirstEnergy" refers to FirstEnergy Corp. and its subsidiaries. Such statements are subject to certain risks and uncertainties and readers are cautioned not to place undue reliance on these forward-looking statements. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "forecast," "target," "will," "intend," "believe," "project," "estimate," "plan" and similar words. These statements include declarations regarding management's intents, beliefs and current expectations, including statements regarding FirstEnergy Corp.'s current expectations and beliefs as to the pricing and closing of the convertible notes offering and use of the proceeds thereof. These forward-looking statements are not guarantees of future performance and they are based on management's expectations that involve or rely on a number of known and unknown risks, uncertainties and other factors that are difficult to predict or are beyond our control, and reflect management's beliefs and assumptions based on information available at the time the statements are made. FirstEnergy Corp. cautions you that actual results may differ materially from those expressed, implied or forecast by the forward-looking statements. Risks that may cause these forward-looking statements to be inaccurate or incorrect include, among others whether we will be able to consummate the convertible notes offering; the final terms of the convertible notes offering; the satisfaction of customary closing conditions with respect to the convertible notes offering; prevailing market conditions; the anticipated use of net proceeds of the convertible notes offering which could change as a result of market conditions or for other reasons; and the risks and other factors discussed from time to time in our Securities and Exchange Commission filings, including, but not limited to, the most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. FirstEnergy Corp. expressly disclaims any obligation to update or revise, except as required by law, any forward-looking statements contained herein or in the information incorporated by reference as a result of new information, future events or otherwise.

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SOURCE FirstEnergy Corp.

FAQ

What is the total value of FirstEnergy's (FE) new convertible notes offering?

FirstEnergy is offering $1.8 billion in convertible senior notes, with $950 million due 2029 and $850 million due 2031, plus potential additional notes of $300 million through purchaser options.

How will FirstEnergy (FE) use the proceeds from the convertible notes?

The proceeds will be used to repurchase $1.5 billion of existing 4.00% convertible notes due 2026, repay other debt, and for general corporate purposes.

What are the conversion terms for FirstEnergy's (FE) 2029 and 2031 notes?

The notes will be convertible to cash up to the principal amount, and the remainder can be settled in cash, common stock, or a combination, at FirstEnergy's election. Specific conversion rates will be determined at pricing.

Who can purchase FirstEnergy's (FE) new convertible notes?

The notes are only being offered to qualified institutional buyers through a private placement under Rule 144A of the Securities Act.

When will FirstEnergy's (FE) new convertible notes mature?

The two series of convertible notes will mature in 2029 and 2031 respectively.