QUANTUMONLINE.COM SECURITY DESCRIPTION: NiSource Inc. Equity Units, stated amount $100.00 per unit, initially consisting of Corporate Units which include a stock purchase contract and a 1/10th, or 10%, undivided beneficial ownership in one share of Series C Mandatory Convertible Preferred Stock with a principal amount of $1000.00. The stock purchase contract requires the holder to purchase for $100 a variable number of shares of NiSource Inc. (NYSE: NI) common stock no later than 12/01/2023 and pays a contract adjustment rate of 7.75% per annum. The stock purchase settlement rate will be 4.08 shares per unit if the then current market price is equal to or lesser than $24.51 and if the market prices is greater than $24.51 the settlement rate will be $100 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 04/13/2021 was $24.51 per share. The stock purchase contract may be settled any time at the holder’s option and the company will deliver 3.468 shares of common stock (85% of reference value) for each purchase contract.
The NiSource Inc Series C Mandatory Convertible Preferred Stock, liquidation preference $1000 per share. The preferred shares are mandatorily convertible on 03/01/2024 into a variable number of NiSource Inc (NYSE: NI) common shares based on the then current price of the common shares for 20 consecutive trading days immediately prior to the conversion date. The conversion settlement rate will be 34.7231 shares per unit if the then current market price is equal to or greater than $28.7993 and 40.7997 shares per unit if the market price is equal to or less than $24.51. For market prices between those values the settlement rate will be $1000 divided by the market value. The last reported sale price of the common stock on 04/13/2021 was $24.51 per share. The Series C Mandatory Convertible Preferred Stock is due 03/01/2024 and is subject to reset and remarketing on 12/01/2023 or 03/01/2024 and will not pay any dividends or be convertible at the option of the holder (other than on the manditory conversion date) unless a sucessful remarketing has occurred. The Series C Mandatory Convertible Preferred Stock are pledged as collateral to secure the holder's obligations under the stock purchase contract.
The Equity Units pay quarterly distributions of 7.75% ($7.75) per annum 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).
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.
If a Fundamental Change occurs, holders of the corporate units may be able to convert the purchace contract into common stock at the conversion rate plus a fundamental change dividend make-whole amount. (see prospectus for further information).
The issuer may elect to defer the interest payable on the Purchase Contrtact on one or more occasions up to the manditory conversion date (see prospectus for further information).
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 Series C Mandatory Convertible Preferred Stock and to later recreate the Corporate Units.
This security was not rated by Moody’s and rated BBB- by S&P at the time of its IPO. In regard to the payment of distributions 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. See the IPO prospectus for further information on the preferred stock by clicking on the ‘Link to IPO Prospectus’ provided below.
