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Vistra Prices Private Offerings of $500 Million of Senior Secured Notes and $1 Billion of Senior Unsecured Notes

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Vistra Corp. announces the pricing of $500 million senior secured notes due 2034 and $1 billion senior unsecured notes due 2032 in private offerings. The Secured Notes will bear interest at 6.000% per annum, while the Unsecured Notes will bear interest at 6.875% per annum. The proceeds will be used for general corporate purposes, including refinancing outstanding debt and paying related fees and expenses.
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The announcement by Vistra Corp. regarding its dual offering of senior secured and unsecured notes is a strategic financial move. The differentiation in security and pricing between the two offerings reflects the company's approach to capital structure optimization. The interest rates of 6.000% for the secured notes and 6.875% for the unsecured notes are indicative of the risk premium investors demand for unsecured debt. The decision to use proceeds for refinancing existing debt and general corporate purposes suggests a proactive approach to managing the company's debt profile, particularly in light of the upcoming 2024 debt maturities.

Investors should note the conditional nature of the collateral release on the secured notes, which hinges on obtaining an investment grade rating. This could potentially affect the risk assessment of the secured notes. The company's ability to secure first-priority interest in collateral under the Credit Agreement provides a layer of security for investors, but it also emphasizes the need to monitor the creditworthiness of Vistra Corp. closely.

The pricing of Vistra Corp.'s notes close to their face value, especially the unsecured notes at 100%, suggests a favorable market reception to the company's credit story. The private offering nature, targeting qualified institutional buyers, aligns with the regulatory compliance under Rule 144A and Regulation S, which is standard for such transactions. However, the lack of public registration could limit the liquidity of these notes, which is a factor for investors to consider.

Moreover, the guarantee by certain subsidiaries and the conditionality of the collateral securing the secured notes offer insights into the company's structural subordination risks. Investors in the unsecured notes, in particular, should be aware of their position in the capital hierarchy, as they would be secondary to secured creditors in the event of a default.

The strategic use of proceeds from the offering by Vistra Corp. to address upcoming debt maturities in 2024 indicates a forward-looking management of the company's financial obligations. This move is likely to be viewed positively by the market as it demonstrates prudent financial planning and a commitment to maintaining a healthy balance sheet. The dual offering also provides the company with flexibility in its capital allocation, which could be beneficial for pursuing growth opportunities or other investments that could enhance shareholder value in the long term.

However, it's important to consider the broader economic context, such as interest rate trends and market conditions, which can influence the cost of capital and the demand for such debt instruments. The chosen interest rates might reflect the current market environment and investor sentiment towards the energy sector and Vistra Corp.'s specific risk profile.

IRVING, Texas, April 9, 2024 /PRNewswire/ -- Vistra Corp. (NYSE: VST) (the "Company" or "Vistra") announced today the pricing of $500 million aggregate principal amount of senior secured notes due 2034 at a price to the public of 99.865% of their face value (the "Secured Notes") in a private offering (the "Secured Offering") and $1 billion aggregate principal amount of senior unsecured notes due 2032 at a price to the public of 100.000% of their face value (the "Unsecured Notes" and, together with the Secured Notes, the "Notes") in a concurrent private offering (the "Unsecured Offering" and, together with the Secured Offering, the "Offerings") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The Secured Notes will be senior, secured obligations of Vistra Operations Company LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of the Company (the "Issuer"), and the Unsecured Notes will be senior, unsecured obligations of the Issuer. The Secured Notes will bear interest at the rate of 6.000% per annum and the Unsecured Notes will bear interest at the rate of 6.875% per annum. The Notes will be fully and unconditionally guaranteed by certain of the Issuer's current and future subsidiaries that also guarantee the Issuer's Credit Agreement, dated as of October 3, 2016 (as amended, the "Credit Agreement"), by and among the Issuer, as borrower, Vistra Intermediate Company LLC, the guarantors party thereto, Citibank, N.A. (as successor to Credit Suisse AG, Cayman Islands Branch and Deutsche Bank AG New York Branch), as administrative and collateral agent, various lenders and letter of credit issuers party thereto, and the other parties named therein. The Secured Notes will be secured by a first-priority security interest in the same collateral that is pledged for the benefit of the lenders under the Credit Agreement and certain other agreements, which consists of a substantial portion of the property, assets and rights owned by the Issuer and the subsidiary guarantors (which does not include Vistra Vision LLC, a Delaware limited liability company ("Vistra Vision") and its subsidiaries) as well as the equity interest of the Issuer and the 85% equity interest of Vistra Vision owned by Vistra. The collateral securing the Secured Notes will be released if the Issuer's senior, unsecured long-term debt securities obtain an investment grade rating from two out of the three rating agencies, subject to reversion if such rating agencies withdraw the investment grade rating of the Issuer's senior, unsecured long-term debt securities or downgrade such rating below investment grade.

The Company intends to use the proceeds from the Offerings for general corporate purposes, including to refinance outstanding indebtedness (including the upcoming 2024 debt maturities) and to pay fees and expenses related to the Offerings.

The Offerings are expected to close on April 12, 2024, subject to customary closing conditions. The consummation of the Secured Offering is not conditioned upon the consummation of the Unsecured Offering, and the consummation of the Unsecured Offering is not conditioned upon the consummation of the Secured Offering.

The Notes will not be registered under the Securities Act or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of these securities 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 such state or jurisdiction.

About Vistra
Vistra (NYSE: VST) is a leading Fortune 500 integrated retail electricity and power generation company that provides essential resources to customers, businesses, and communities from California to Maine. Based in Irving, Texas, Vistra is a leader in the energy transformation with an unyielding focus on reliability, affordability, and sustainability. The company safely operates a reliable, efficient, power generation fleet of natural gas, nuclear, coal, solar, and battery energy storage facilities while taking an innovative, customer-centric approach to its retail business. Learn more at vistracorp.com.

Cautionary Note Regarding Forward-Looking Statements
The information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which Vistra operates and beliefs of and assumptions made by Vistra's management, involve risks and uncertainties, which are difficult to predict and are not guarantees of future performance, that could significantly affect the financial results of Vistra. All statements, other than statements of historical facts, that are presented herein, or in response to questions or otherwise, that address activities, events or developments that may occur in the future, including such matters as activities related to our financial or operational projections, capital allocation, capital expenditures, liquidity, dividend policy, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of power generation assets, market and industry developments and the growth of our businesses and operations (often, but not always, through the use of words or phrases, or the negative variations of those words or other comparable words of a future or forward-looking nature, including, but not limited to: "intends," "plans," "will likely," "unlikely," "believe," "confident", "expect," "seek," "anticipate," "estimate," "continue," "will," "shall," "should," "could," "may," "might," "predict," "project," "forecast," "target," "potential," "goal," "objective," "guidance" and "outlook"), are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Although Vistra believes that in making any such forward-looking statement, Vistra's expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and risks that could cause results to differ materially from those projected in or implied by any such forward-looking statement, including, but not limited to: (i) adverse changes in general economic or market conditions (including changes in interest rates) or changes in political conditions or federal or state laws and regulations; (ii) the ability of Vistra to execute upon its contemplated strategic, capital allocation, performance, cost-saving initiatives, and to successfully integrate acquired businesses; (iii) actions by credit ratings agencies; and (iv) those additional risks and factors discussed in reports filed with the Securities and Exchange Commission by Vistra from time to time, including the uncertainties and risks discussed in the sections entitled "Risk Factors" and "Forward-Looking Statements" in Vistra's annual report on Form 10-K for the year ended December 31, 2023 and any subsequently filed quarterly reports on Form 10-Q.

Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, Vistra will not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible to predict all of them; nor can Vistra assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

 

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SOURCE Vistra Corp

FAQ

What is the pricing of the senior secured notes due 2034 by Vistra Corp.?

The senior secured notes due 2034 by Vistra Corp. were priced at $500 million in a private offering.

What is the interest rate for the senior unsecured notes due 2032?

The senior unsecured notes due 2032 will bear interest at a rate of 6.875% per annum.

How will Vistra Corp. utilize the proceeds from the Offerings?

Vistra Corp. intends to use the proceeds for general corporate purposes, including refinancing outstanding debt and paying fees and expenses related to the Offerings.

When are the Offerings expected to close?

The Offerings are expected to close on April 12, 2024, subject to customary closing conditions.

Are the Notes registered under the Securities Act?

No, the Notes will not be registered under the Securities Act or the securities laws of any state or other jurisdiction.

Vistra Corp.

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About VST

vistra energy is an integrated retail and generation company, with a strong balance sheet, positive cash flows and a strategy for growth. with a tradition of operational excellence from predecessor companies that go back more than a century and a vision for the future, vistra energy has unique expertise in customer relationships, commodity pricing, and risk management. the retail company serves 1.7 million residential and business customers in texas, backed by nearly 18,000 mw of a balanced generation portfolio in texas, including 2,300 mw fueled by nuclear power, 8,000 mw fueled by coal and 7,500 mw fueled by natural gas, and is a large purchaser of renewable power including wind and solar-generated electricity.