QUANTUMONLINE.COM SECURITY DESCRIPTION: The AES Corp.Equity Units, stated amount $100.00 per unit, initially consisting of Corporate Units which include a stock purchase contract and a 1/10th, undivided beneficial ownership in one share of AES Corp. 0% Series A Cumulative Perpetual Convertible Preferred Stock with a liquidation preference of $1,000 per share The stock purchase contract requires the holder to purchase for $100.00 a variable number of shares of AES Corp (NYSE: AES) common stock no later than 02/15/2024 and pays a contract adjustment rate of 6.875% per annum. The stock purchase settlement rate will be 3.8640 shares per unit if the market price is equal to or less than $25.88 (the reference price). For market prices greater than the reference price the settlement rate will be $100.00 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 03/04/2021 was $25.88 per share. The stock purchase contract may be settled any time in multples of 10 at the holder’s option and the company will deliver 85% of the shares that would would be deliverable for each purchase contract (see prospectus for more details).
The AES Corp. 0% Series A Cumulative Perpetual Convertible Preferred Stock liquidation preference $1000.00 per share, redeemable at the issuer's option on or after 03/22/2024 at $1000.00 per share plus accrued and unpaid dividends, and with no stated maturity. The 0% Series A Cumulative Perpetual Convertible Preferred Stock and is subject to reset and remarketing beginning on and including 11/15/2023 and ending on and including 02/24/2024. After a successful remarketing of the convertible preferred stock dividends may become payable on the convertible preferred stock. If the closing price on the pricing date for a successful remarketing is less than or equal to the reference price, the conversion rate of the convertible preferred stock may be increased to an amount equal to $1,000, divided by 122.5% of the closing price on such date (rounded to the nearest ten-thousandth of a share) and/or the earliest redemption date for the convertible preferred stock may be changed to a later date that is on or prior to March 21, 2025 (see prospectus for more details).
Interest distributions of 6.875% per annum ($6.875 per annum or $1.71875 per quarter) will be paid quarterly on 2/15, 5/15, 8/15 & 11/15 to holders of record on the record date (NOTE: the ex-dividend date is one business day prior to the record date). Distributions paid by these debt securities are interest and as such are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders.
The 0% Series A Cumulative Perpetual Convertible Preferred Stock are pledged as collateral to secure the holder's obligations under the stock purchase contract.
The holder has the right at any time in multiples of 10 to convert the Corporate Units to Treasury Units by the substitution of a specified zero-coupon U.S. Treasury security for the 0% Series A Cumulative Perpetual Convertible Preferred Stock and to later recreate Corporate Units. The holder has the right at any time in multiples of 10 to convert the Corporate Units to Cash Settled Units by substituting for the related convertible preferred stock held by the collateral agent cash in an amount equal to $1,000 multiplied by the number of shares of convertible preferred stock for which substitution is being made (see prospectus for more details).
This security is possibly subject to an early call as a result of a fundamental change of control stock at the fundamental change conversion rate plus a fundamental change dividend make-whole amount (see prospectus for further information).
The 0% Series A Cumulative Perpetual Convertible Preferred Stock was rated as Ba3 by Moody’s and BB by S&P at the date of its IPO. In regard to the payment of dividends and upon liquidation, the preferred shares rank junior to the company's senior debt, equally with other preferreds of the company, and senior to the common shares of the company.
