QUANTUMONLINE.COM SECURITY DESCRIPTION: NextEra Energy, Inc. 5.279% Equity Units stated amount $50 per unit, initially consisting of Equity Units which include a stock purchase contract and a 5% undivided beneficial ownership interest in a Series K Debenture due March 1, 2025, issued in the principal amount of $1,000 by NextEra Energy Capital Holdings, Inc. The stock purchase contract requires the holder to purchase for $50 a variable number of shares of NextEra Energy, Inc. (NYSE: NEE) common stock no later than 3/1/2023 and pays a contract adjustment rate of 3.439% per annum. The stock purchase settlement rate will be 0.1428 shares per unit if the then current market price is equal to or greater than $352.55 and 0.1773 shares per unit if the market price is equal to or less than $282.04. The stock purchase settlement rate will be 0.5672 shares per unit if the then current market price is equal to or greater than $88.14 and 0.7092 shares per unit if the market price is equal to or less than $70.51. For market prices between those values the settlement rate will be $50 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 2/18/2020 was $282.04 per share. The stock purchase contract may be settled any time at the holder’s option and the company will deliver 0.1428 0.5672 shares of common stock for each purchase contract.
The issuer may at its option and upon prior written notice to the holders of the Equity Units and the purchase contract agent, defer the payment of the stock purchase contract up until the settlement contract date. Any deferred contract adjustment payments will accrue an additional contract adjustment payments at the rate of 5.279% per year until paid.
The Equity Units pay quarterly distributions of 5.279% ($2.6395 per annum or $0.659875 per quarter) will be paid quarterly on 3/1, 6/1, 9/1 & 12/1 to holders of record on the record date which is one business day prior to the payment date while the securities remain in book-entry form (NOTE: the ex-dividend date is one business day prior to the record date).
This security is possibly subject to an early call as a result of the occurrence of certain tax or corporate events (see the prospectus for further information).
The Series K Debenture will initially bear interest at a rate of 1.84% per year, payable quarterly in arrears. The Series K Debenture is due 3/1/2025 and is subject to reset and remarketing on the fifth business day prior to 9/1/2022 until the ninth business day preceding 3/1/2023. If this remarketing is successful, the interest rate on the Series K Debenture will be reset and thereafter interest will be payable semi-annually at the reset rate.
Distributions paid by these securities are derived from interest paid on the underlying debt securities and therefore 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 holder has the right at any time to convert the Corporate Units to Treasury Units by the substitution of a specified zero-coupon U.S. Treasury security for the Notes and to later recreate Corporate Units.
The Equity Units are unsecured and rank equally with the company's other unsecured senior indebtedness. See the IPO prospectus for extensive additional information on the equity units and their mandatory conversion provisions by clicking on the ‘Link to IPO Prospectus’ provided below.
