Dominion (NYSE: D) announced today that it has priced its offering of 25 million 2016 Series A equity units. Each 2016 Series A equity unit will be issued in a stated amount of $50 ($1.25 billion aggregate stated amount) and will consist of a contract to purchase common stock in the future, a 1/40 undivided beneficial ownership interest in Dominion's 2016 Series A-1 remarketable subordinated notes due 2021 having a principal amount of $1,000 and a 1/40 undivided beneficial ownership interest in Dominion's 2016 Series A-2 remarketable subordinated notes due 2024 having a principal amount of$1,000. Each of the remarketable subordinated notes is subject to remarketing to commence no earlier thanMay 13, 2019. The offering is expected to close on Aug. 15, 2016, subject to customary closing conditions.
Total annual distribution on the 2016 Series A equity units will be at the rate of 6.75 percent, consisting of interest on the 2016 Series A-1 remarketable subordinated notes due 2021, interest on the 2016 Series A-2 remarketable subordinated notes due 2024 and payments under the related stock purchase contracts. The reference price for the 2016 Series A equity units is $74.73 per share. The threshold appreciation price for the 2016 Series A equity units is $93.4056 per share, which represents a premium of approximately 25 percent over the reference price. Under the purchase contract, holders are required to purchase a variable number of shares of Dominion common stock no later than Aug. 15, 2019.
Dominion has granted the underwriters an option to purchase during the 13-day period beginning on, and including, the initial issuance date of the 2016 Series A equity units up to 3 million additional 2016 Series A equity units, or an additional aggregate stated amount of $150 million.
Dominion intends to use the net proceeds from this offering, which are expected to be $1,227,500,000 in the aggregate or $1,374,800,000 in the aggregate if the over-allotment option is exercised in full (in each case, after deducting underwriting discounts and commissions but before deducting other offering expenses), for general corporate purposes, including funding, in part, Dominion's combination with Questar Corporation (NYSE: STR).
RBC Capital Markets, LLC, Mizuho Securities USA Inc., Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., MUFG Securities Americas Inc., Scotia Capital (USA) Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. are acting as joint book-running managers for the offering.
Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 25,700 megawatts of generation, 12,200 miles of natural gas transmission, gathering and storage pipeline, and 6,500 miles of electric transmission lines. Dominion operates one of the nation's largest natural gas storage systems with 933 billion cubic feet of storage capacity and serves more than 5 million utility and retail energy customers in 14 states. For more information about Dominion, visit the company's website at www.dom.com.
