Pinnacle West Announces Proposed Public Offering of $650 Million of Common Stock
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The announcement by Pinnacle West Capital Corp. of a registered public offering of $650 million in common stock, with an additional option for underwriters to purchase up to $97.5 million, signifies a strategic move to raise capital. The involvement of major financial institutions as joint book-running managers indicates a robust process, aiming for a favorable outcome. This offering, conducted through forward sale agreements, allows Pinnacle West to defer the receipt of proceeds while potentially securing a future cash inflow.
From a financial perspective, the decision to use the net proceeds for investment in its principal subsidiary, Arizona Public Service Company, for capital expenditures and general corporate purposes, suggests a focus on long-term growth and infrastructure enhancement. Investors should note that while Pinnacle West will not immediately receive proceeds, the potential future cash settlement could strengthen its financial position, allowing for reinvestment and possibly impacting future dividends or debt reduction strategies.
Market conditions at the time of the offering play a crucial role in determining the success of Pinnacle West's capital raise. The terms of the forward sale agreements, including the initial forward sale price and the adjustments, will be pivotal in aligning interests between Pinnacle West and the forward purchasers. Market analysts will closely monitor the stock's performance and the offering's pricing relative to market conditions to gauge investor appetite and sentiment towards the company's growth prospects.
Furthermore, the settlement of the forward sale agreements by September 4, 2025, provides a timeline for investors to anticipate potential market impacts. The choice between physical settlement, cash settlement, or net share settlement by Pinnacle West will be a strategic decision based on prevailing market conditions and the company's financial strategy, potentially influencing its stock performance.
The legal framework surrounding this offering is significant, as it is being conducted under an effective shelf registration statement filed with the SEC. Compliance with securities laws and regulations is imperative and the availability of a prospectus supplement and accompanying base prospectus ensures transparency for potential investors. The legal stipulation that there will be no sale of securities in jurisdictions where it would be unlawful prior to registration or qualification underlines the importance of adhering to diverse regulatory environments.
Legal experts will also scrutinize the terms of the forward sale agreements, ensuring they are structured to protect both Pinnacle West and the forward purchasers. The legalities of the settlement options and any conditions associated with them will be critical in understanding the obligations and rights of all parties involved.
Pinnacle West intends to grant the underwriters the option to purchase up to an additional
Barclays, Citigroup, Mizuho and Wells Fargo Securities are acting as joint book-running managers for this offering. The underwriters may offer shares of Pinnacle West’s common stock in transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.
In connection with the offering, Pinnacle West intends to enter into separate forward sale agreements with Mizuho Markets Americas LLC and Wells Fargo Bank, National Association (or their respective affiliates), referred to in such capacity as the forward purchasers, pursuant to which Pinnacle West will agree to sell shares of its common stock to the forward purchasers at an initial forward sale price per share equal to the price per share at which the underwriters purchase the shares in the offering, subject to certain adjustments. In connection with the forward sale agreements, the forward purchasers or their respective affiliates, acting as forward sellers, expect to borrow from third parties an aggregate of approximately
Pinnacle West will not initially receive any proceeds from the sale of shares of its common stock by the forward sellers or their affiliates to the underwriters. If Pinnacle West elects physical settlement of the forward sale agreements, it expects to use any net proceeds received for investment in its principal subsidiary Arizona Public Service Company to fund capital expenditures and general corporate purposes.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering of these securities may be made only by means of a prospectus supplement and accompanying base prospectus relating to this offering.
The public offering is being made pursuant to an effective shelf registration statement that has been filed with the Securities and Exchange Commission (the “SEC”). A preliminary prospectus supplement related to the offering will be filed with the SEC and will be available on the SEC’s website. In addition, copies of the preliminary prospectus supplement and accompanying base prospectus relating to the shares of common stock being offered may be obtained by contacting: Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
General Information
Pinnacle West Capital Corp., an energy holding company based in
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements based on current expectations. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume,” “project,” “anticipate,” “goal,” “seek,” “strategy,” “likely,” “should,” “will,” “could,” and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or Arizona Public Service (“APS”). These factors include, but are not limited to, the factors discussed in the most recent Pinnacle West/APS Form 10-K and 10-Q along with other public filings with the Securities and Exchange Commission, which readers should review carefully before placing any reliance on our financial statements or disclosures. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228781491/en/
Media Contact: Alan Bunnell (602) 250-3376
Analyst Contact: Amanda Ho (602) 250-3334
Website: pinnaclewest.com
Source: Pinnacle West Capital Corp.
FAQ
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