FirstEnergy receives $2.5B equity investment
FirstEnergy announced a $2.5B investment in the company that includes $1.62B in mandatory convertible preferred equity and $850M of common equity. The investment comes from investors including affiliates of Elliott Management Corporation, Bluescape, GIC, and Zimmer Partners, LP. The preferred equity has an initial conversion price of $27.42 per share and will receive dividends payable on FirstEnergy common stock on an as-converted basis and be non-voting, except in limited circumstances. The common equity was issued at a price of $28.22 per share. The proceeds of the private offering will be used to reduce FirstEnergy's holding company debt, contribute to its pension fund, and for general corporate purposes. The investment also will strengthen the company's investment-grade balance sheet. The company does not anticipate the need to issue additional equity through the end of 2020 outside of its stock investment plans and employee benefits programs. As part of this transaction, FirstEnergy will form a Restructuring Working Group. FirstEnergy has designated three members of the working group: CFO Jim Pearson, CLO Leila Vespoli and Gary Benz, senior VP of strategy. The RWG's two outside members are industry professionals C. John Wilder, executive chairman of Bluescape, and Anthony Horton, CFO of Energy Future Holdings Corp.