WEC Energy Group announces upsize and pricing of $775 million of 3.375% Convertible Senior Notes due 2028

Rhea-AI Summary

WEC Energy Group announced the pricing of $775 million convertible senior notes due 2028, upsized from the previously announced $700 million. The notes will carry a 3.375% annual interest rate, paid semiannually, and will mature on June 1, 2028. The initial conversion rate is 7.7901 shares per $1,000 principal amount, equivalent to a conversion price of $128.37 per share, representing a 22.5% premium above the last reported stock price. The company granted initial purchasers an option to purchase an additional $125 million in notes. The notes will be convertible into cash, WEC common stock, or a combination thereof at WEC's election. The offering is expected to close on June 10, 2025, with proceeds intended for general corporate purposes, including short-term debt repayment.

Positive

• Successful upsize of offering from $700M to $775M indicates strong investor demand
• Additional $125M option granted to initial purchasers provides flexibility for further capital raising
• Relatively low interest rate of 3.375% helps manage debt service costs
• Proceeds will help improve balance sheet by repaying short-term debt

Negative

• Potential dilution for existing shareholders if notes are converted to common stock
• Increased debt load could impact company's financial flexibility
• 22.5% conversion premium is relatively modest compared to industry standards

Insights

Fixed Income Analyst

WEC's $775M convertible note offering at 3.375% with 22.5% conversion premium represents standard capital management, extending debt maturities while maintaining financial flexibility.

WEC Energy Group has successfully priced $775 million in convertible senior notes due 2028, upsized from the initially announced $700 million offering, indicating strong investor demand for this debt instrument. The 3.375% interest rate is competitive for convertible securities in the current market environment, especially for investment-grade utility issuers.

The conversion mechanics are structured favorably for the company, requiring cash payment for the principal amount while giving WEC flexibility to settle any conversion value above par with cash, stock, or a combination. This structure helps minimize potential dilution compared to traditional convertible structures. The initial conversion price of approximately $128.37 per share represents a 22.5% premium to current market price – a standard premium that balances attractiveness to investors with dilution protection.

From a balance sheet perspective, using proceeds to repay short-term debt indicates WEC is extending its debt maturity profile, a prudent liability management strategy in the capital-intensive utility sector. The 2028 maturity provides medium-term financing stability without overextending the company's debt obligations.

The Rule 144A private placement structure (limited to qualified institutional buyers) is typical for these offerings and allows for faster execution than a registered public offering. The company also secured an option for purchasers to acquire an additional $125 million in notes, providing further financing flexibility if demand remains strong.

This transaction represents routine financial management rather than signaling any fundamental shift in WEC's business trajectory or financial health. It's a textbook example of a utility optimizing its capital structure by balancing the lower interest rates available on convertible instruments against modest potential equity dilution.

MILWAUKEE, June 5, 2025 /PRNewswire/ -- WEC Energy Group, Inc. (NYSE: WEC) today announced the pricing of $775,000,000 in aggregate principal amount of its 3.375% 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"). The offering was upsized from the previously announced offering of $700,000,000 aggregate principal amount of the convertible notes. In addition, WEC Energy Group granted 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 $125,000,000 in aggregate principal amount of the convertible notes. The offering is expected to close on June 10, 2025, subject to customary closing conditions.

The convertible notes will be senior, unsecured obligations of WEC Energy Group. Interest on the convertible notes will be paid semiannually, at a rate of 3.375% per annum. 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.

The conversion rate for the convertible notes will initially be 7.7901 shares of WEC Energy Group's common stock per $1,000 principal amount of the convertible notes (equivalent to an initial conversion price of approximately $128.37 per share of common stock), representing an initial conversion premium of approximately 22.5% above the last reported sale price of WEC Energy Group's common stock on June 5, 2025. The conversion rate is subject to adjustment in certain circumstances. In addition, following certain corporate events that occur prior to the maturity date of the convertible notes, WEC Energy Group will, in certain circumstances, increase the conversion rate of the convertible notes for any holder who elects to convert its notes in connection with such corporate event.

If WEC Energy Group undergoes a fundamental change (as defined in the indenture that will govern the convertible notes), subject to certain conditions, holders of the convertible notes may require WEC Energy Group to repurchase for cash all or any portion of their convertible notes at a repurchase price equal to 100% of the principal amount of the convertible notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. 

WEC Energy Group may not redeem the convertible notes prior to their maturity date. 

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 regarding the completion of the offering of convertible notes 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; the satisfaction of closing conditions related to the offering; 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 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.

From: Brendan Conway (media)
414-221-4444
brendan.conway@wecenergygroup.com 

Beth Straka (investment community)
414-221-4639
beth.straka@wecenergygroup.com

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SOURCE WEC Energy Group

FAQ

What is the size and interest rate of WEC Energy Group's new convertible notes offering?

WEC Energy Group is offering $775 million in convertible senior notes with a 3.375% annual interest rate, paid semiannually.

When will WEC Energy Group's convertible notes mature?

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

What is the conversion price for WEC Energy Group's new convertible notes?

The initial conversion price is approximately $128.37 per share, representing a 22.5% premium above the last reported stock price.

How will WEC Energy Group use the proceeds from the convertible notes?

The company intends to use the net proceeds for general corporate purposes, including the repayment of short-term indebtedness.

What happens if WEC Energy Group undergoes a fundamental change?

Holders can require WEC to repurchase their notes for cash at 100% of the principal amount plus accrued interest if a fundamental change occurs.