WEC Energy Group announces offering of Convertible Senior Notes due 2028

Rhea-AI Summary

WEC Energy Group (NYSE: WEC) has announced plans to offer $700 million in convertible senior notes due 2028 through a private offering to qualified institutional buyers. The initial purchasers will have an option to buy an additional $105 million in notes within 13 days. The notes will be senior, unsecured obligations with semiannual interest payments, maturing on June 1, 2028. Conversion rights will be limited before March 1, 2028, becoming freely convertible thereafter. Upon conversion, WEC will pay cash up to the principal amount and may choose to settle the remainder in cash, common stock, or a combination. The proceeds will be used for general corporate purposes, including short-term debt repayment. WEC Energy Group serves 4.7 million customers across Wisconsin, Illinois, Michigan, and Minnesota through its utilities portfolio.

Positive

• Potential to strengthen balance sheet through refinancing of short-term debt
• Flexible conversion terms allowing WEC to choose settlement method
• Additional funding capacity with $105 million overallotment option
• Strong market presence serving 4.7 million customers across multiple states

Negative

• Potential dilution for existing shareholders if notes are converted to common stock
• Increased debt obligation with $700 million principal amount
• Additional interest payment obligations until 2028
• Limited conversion rights for noteholders before March 1, 2028

Insights

Corporate Finance Specialist

WEC Energy's $700M convertible notes offering strengthens their balance sheet by refinancing short-term debt with longer-term financing.

WEC Energy Group is making a strategic financial move by offering $700 million in convertible senior notes due 2028, with a potential additional $105 million if initial purchasers exercise their option. This financing approach offers several advantages for the utility company. The convertible nature of these notes provides flexibility - while they initially function as debt with semiannual interest payments, they can later be converted into equity under specific conditions.

The company has explicitly stated they'll use proceeds for general corporate purposes and repaying short-term debt. This suggests a deliberate liability management strategy to replace shorter-term obligations with longer-term financing that doesn't mature until 2028. By extending their debt maturity profile, WEC is likely reducing refinancing risk and potentially locking in rates before they potentially rise further.

The conversion features are structured to protect the company's interests while offering potential upside to institutional investors. Holders can't convert before March 2028 except under specific circumstances, giving WEC nearly three years of predictable debt structure. Upon conversion, WEC maintains flexibility by choosing whether to settle using cash, stock, or a combination.

As a major utility serving 4.7 million customers across four states, maintaining financial flexibility is crucial for WEC's ongoing operations and capital investments in energy infrastructure. This offering, available only to qualified institutional buyers under Rule 144A, represents a standard capital raising approach for a company of WEC's size and sector.

MILWAUKEE, June 5, 2025 /PRNewswire/ -- WEC Energy Group, Inc. (NYSE: WEC) today announced that it intends to offer, subject to market and other conditions, $700,000,000 in aggregate principal amount of its convertible senior notes due 2028 (the "convertible notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). In addition, WEC Energy Group expects to grant the initial purchasers of the convertible notes an option to purchase, within a 13-day period beginning on, and including, the date the convertible notes are first issued, up to an additional $105,000,000 in aggregate principal amount of the convertible notes.

Final terms of the convertible notes, including the initial conversion price, interest rate and certain other terms of the convertible notes, will be determined at the time of pricing. The convertible notes will be senior, unsecured obligations of WEC Energy Group. Interest on the convertible notes will be paid semiannually. The convertible notes will mature on June 1, 2028, unless earlier converted or repurchased in accordance with their terms.

Prior to March 1, 2028, holders will have the right to convert their convertible notes only upon the occurrence of certain events and during certain periods. From and after March 1, 2028, holders will have the right to convert their convertible notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the convertible notes. Upon conversion, WEC Energy Group will pay cash up to the aggregate principal amount of the convertible notes to be converted and pay or deliver, as the case may be, cash, shares of WEC Energy Group's common stock, or a combination of cash and shares of common stock, at WEC Energy Group's election, in respect of the remainder, if any, of WEC Energy Group's conversion obligation in excess of the aggregate principal amount of the convertible notes being converted.

WEC Energy Group intends to use the net proceeds from this offering for general corporate purposes, including the repayment of short-term indebtedness.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful. The offer and sale of the convertible notes and the shares of common stock issuable upon conversion of the convertible notes, if any, have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction, and the convertible notes and such shares of common stock may not be offered or sold without registration or an applicable exemption from registration requirements.

WEC Energy Group (NYSE: WEC), based in Milwaukee, is an energy company serving 4.7 million customers in Wisconsin, Illinois, Michigan and Minnesota.

The company's principal utilities are We Energies, Wisconsin Public Service, Peoples Gas, North Shore Gas, Michigan Gas Utilities, Minnesota Energy Resources and Upper Michigan Energy Resources. Another major subsidiary, We Power, designs, builds and owns electric generating plants. In addition, WEC Infrastructure LLC owns a fleet of renewable generation facilities in states ranging from South Dakota to Texas.

Forward-looking statements

Certain statements contained in this press release are "forward-looking statements" under federal securities laws.  These statements are based upon management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in the forward-looking statements. Readers are cautioned not to place undue reliance on these statements. Forward-looking statements include, among other things, statements concerning the anticipated terms of the convertible notes being offered, the completion, timing and size of the offering and the intended use of proceeds.

Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, but are not limited to: market conditions, including market interest rates; the trading price and volatility of WEC Energy Group's common stock; and risks relating to WEC Energy Group's business, including those described under the heading "Factors Affecting Results, Liquidity and Capital Resources" in Management's Discussion and Analysis of Financial Condition and Results of Operations and under the headings "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and in subsequent reports filed with the Securities and Exchange Commission.  There can be no assurance that the planned offering of convertible notes will be completed on the anticipated terms, or at all. Except as may be required by law, WEC Energy Group expressly disclaims any obligation to update any forward‐looking information.

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SOURCE WEC Energy Group

FAQ

What is the size of WEC Energy Group's convertible notes offering in 2028?

WEC Energy Group is offering $700 million in convertible senior notes, with an additional option for purchasers to buy $105 million more within 13 days.

When will WEC Energy Group's 2028 convertible notes mature?

The convertible notes will mature on June 1, 2028, unless converted or repurchased earlier according to their terms.

How will WEC Energy Group handle the conversion of these 2028 notes?

Upon conversion, WEC will pay cash up to the principal amount and can choose to settle the remainder in cash, common stock, or a combination.

What will WEC Energy Group use the convertible notes proceeds for?

WEC Energy Group plans to use the net proceeds for general corporate purposes, including the repayment of short-term indebtedness.

When can holders convert WEC Energy Group's 2028 convertible notes?

Before March 1, 2028, conversion is allowed only under certain conditions. After March 1, 2028, holders can convert at any time until two trading days before maturity.