#USA #Atlanta #Southern Company #equity units #Remarketable Notes

Southern Company Prices Offering of Equity Units

Southern Company, a leading energy provider in the Southeast, has officially priced its latest offering of equity units. Announced on November 3, 2025, the company is set to issue a total of 35 million 2025 Series A Equity Units, each priced at $50, bringing the total aggregate amount to approximately $1.75 billion. These equity units are structured to provide investors with a robust financial product that integrates ownership in common stock along with beneficial interests in remarketable senior notes, thereby embedding a diverse investment approach.

Structure of the Equity Units

The 2025 Series A Equity Units offer unique investment features. Each unit comprises:

• - A contract allowing the purchase of Southern Company's common stock in the future
• - A 1/40 undivided beneficial ownership interest in Southern Company's Series 2025B Remarketable Senior Notes due in 2030, with a principal value of $1,000
• - A 1/40 undivided beneficial ownership interest in Southern Company's Series 2025C Remarketable Senior Notes due in 2033, also with a principal value of $1,000.

These remarketable senior notes can be subject to remarketing beginning no sooner than June 13, 2028, allowing investors flexibility and options in managing their portfolios. The equity units are expected to close on November 6, 2025, pending customary closing conditions.

Financial Implications and Use of Proceeds

With an anticipated annual distribution rate of 7.125%, investors are likely to find this offering attractive as it combines fixed income elements with equity exposure. The reference price for the equity units stands at $93.15 per share, with a threshold appreciation price set at $116.44 per share — suggesting a premium of approximately 25% over the reference price. This pricing strategy could notably enhance investor interest and promote active participation in the market.

Southern Company plans to utilize approximately $1.153 billion of the proceeds for strategic financial maneuvers, including:

• - Repurchasing Existing Convertible Notes: Specifically targeting a portion of the Series 2023A 3.875% Convertible Senior Notes maturing on December 15, 2025, and the Series 2024A 4.50% Convertible Senior Notes maturing on June 15, 2027.
• - Debt Repayment: The balance of net proceeds will aid in settling short-term debts and potentially fulfilling obligations tied to remaining convertible notes.
• - Corporate Investments: Remaining assets will be allocated towards general corporate purposes, including investments in subsidiary companies, which can facilitate growth and expansion opportunities for Southern Company.

Market Dynamics and Strategic Considerations

There is a notable expectation that the repurchase of existing convertible notes may trigger various derivative activities among holders. By closing short positions in Southern Company’s common stock, these activities could influence the stock's market price, potentially leading to an increased effective reference price for the stock purchase contract component of the equity units.

Prominent financial institutions, including BofA Securities, J.P. Morgan, and Mizuho, have come on board as joint book-running managers for this offering, underscoring its significance in the current market landscape.

Conclusion

Southern Company's proactive move in pricing its equity units demonstrates its commitment to enhancing its financial health and supporting long-term growth strategies. Amidst an evolving market environment, this offering aims to solidify investor confidence and foster the company’s growth trajectory in the competitive energy sector. For more information about the offering, interested parties are encouraged to consult the detailed prospectus available from the underwriting banks.

In summary, this offering represents a strategic effort by Southern Company to optimize its financial structure while positioning itself for future successes in serving approximately nine million customers across the Southeast and beyond. With such initiatives, Southern Company continues to underscore its role as a pivotal player in the energy sector, reflecting resilience and adaptability in a market marked by rapid changes.