IRVING, Texas, Oct. 12, 2021 /PRNewswire/ -- Vistra Corp.
(NYSE: VST) (the "Company" or "Vistra") today announced a new
$2 billion share repurchase program
and the pricing of a private offering (the "Offering") of 1,000,000
shares of its 8% Series A Fixed-Rate Reset Cumulative
Redeemable Perpetual Preferred Stock (the "Preferred Stock") to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"), and to
certain non-U.S. persons in accordance with Regulation S under the
Securities Act, at an offering price of $1,000 per share. The Company will receive gross
proceeds of $1 billion from the sale
of the Preferred Stock before deducting the initial purchaser
discount and other estimated offering expenses. The Offering is
expected to close on Oct. 15, 2021,
subject to customary closing conditions.
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As an initial step in its broader capital allocation plan, the
Company intends to use the net proceeds from the Offering to
repurchase its common stock beginning as early as early
November 2021. Vistra's Board of
Directors ("Board") has adopted a new $2
billion share repurchase program, effective immediately
(superseding its prior $1.5 billion
repurchase program, which had approximately $1.325 billion of remaining authorization). The
Company intends to execute the share repurchases under this new
program from November 2021 to the end
of December 2022. The timing and
amount of share repurchases will be announced publicly each quarter
in arrears, consistent with Vistra's historical practice.
The share repurchase program announced today is aligned with the
Company's previously announced strategic and capital allocation
review seeking to enhance shareholder returns. Vistra's strategic
review has identified and prioritized four key strategic
imperatives, including:
- Driving long-term, sustainable value through Vistra's
integrated business model. Vistra management believes the
pairing of its low-cost, efficient, and diversified generation
fleet, including its burgeoning zero-carbon business, with its
customer-centric retail platform and best-in-class commercial
capabilities is the optimal way to create value for its
shareholders in the dynamic, competitive markets where the Company
operates.
- Returning significant capital to
shareholders. Vistra expects it will use a significant
portion of its free cash flow to repurchase its shares and expects
it will continue to pay a meaningful dividend on its common stock.
Today's announcement advances one of Vistra's core capital
allocation priorities by using lower-cost capital to accelerate the
Company's ability to repurchase its severely discounted shares. The
repurchases will reduce the total number of shares outstanding,
which over time should accrue value to Vistra's remaining
shareholders.
-
- Repurchasing Vistra's undervalued shares of common
stock. At Vistra's current undervalued stock price, and
assuming on average at least $3+ billion of Adjusted EBITDA from
Ongoing Operations and 60%+ free cash flow conversion on an annual
basis, the Company estimates it could repurchase at least
$5 billion of common stock by
year-end 2025, approximating 60% of its current market
capitalization and by the end of the decade return its entire
current market capitalization to shareholders without
negatively impacting the earnings power of the business. The
Company is committed to allocating a significant amount of its
capital to share repurchases until the public equity markets
reflect a valuation for Vistra that is consistent with management
and the Board's view of fair value.
- Prioritizing a meaningful dividend on its common
stock. We anticipate the capital allocated to common
dividends will grow on a per-share basis (subject to Board
authorization), though with fewer shares outstanding, we expect the
gross amount to decrease, freeing up capital for other uses.
- Maintaining a strong balance sheet. Vistra expects it
will continue to pay down debt over time in order to maintain a
strong balance sheet, allowing the Company to manage commodity and
climate change risk, and positioning it to prudently pursue
opportunistic growth. By year-end 2022, the Company expects to
reduce a meaningful portion of the $2
billion in increased debt resulting from the impacts of
Winter Storm Uri.
- Accelerating our zero-carbon growth pipeline with
cost-efficient capital. Vistra intends to participate in
the electric industry transition utilizing its strong capabilities,
attractive and significant pipeline of zero-carbon projects, and
access to low-cost capital.
-
- Vistra has nearly 4,000 megawatts of zero-carbon assets online
or under development with more than 3,000 MW of zero-carbon assets
in its development pipeline, including approximately 450 MW of
solar and storage in downstate Illinois, supported by the recently enacted
Coal to Solar and Energy Storage initiative. The Company intends to
accelerate the development of its battery energy storage and
renewable projects by accessing the significant availability of
third-party, cost-effective capital seeking green investments –
both debt and equity. The event at the 300-MW / 1200-MWh Phase I
building of Vistra's Moss Landing Energy Storage Facility slightly
delayed the Company's execution of this financing strategy, though
the Company expects it will have achieved meaningful progress on
the capital raise by mid-December.
- This zero-carbon pipeline complements Vistra's recently
accelerated target reductions in greenhouse gas emissions. Vistra
has a goal to achieve a 60% reduction in
CO2 equivalent emissions by 2030, as compared to a
2010 baseline, and a long-term objective to achieve net-zero carbon
emissions by 2050.1 Vistra is already 75% of the way
toward achieving its 2030 goal and recently joined SBTi's Business
Ambition for 1.5°C, committing to align emissions reduction targets
with the Paris Agreement to keep warming to 1.5°C and reaching
science-based net-zero emissions by 2050.
Vistra's announcement today of this share repurchase program is
the first step in launching the details of the Company's strategic
review. Additional details outlining Vistra's strategic imperatives
are forthcoming.
(1) Assuming necessary
advancements in technology and supportive market constructs and
public policy.
"Today, Vistra took an important first step in executing on the
output of its strategic review by taking advantage of the
unprecedented and unsustainable differences in the cost of capital
implied in its equity value as compared to other forms of capital,
such as debt and preferred stock," said Curt Morgan, Vistra's chief executive officer.
"This announcement underscores our confidence in the business and
commitment to enhancing shareholder value while maintaining our
strong balance sheet. The strategic imperatives announced today are
a result of a months-long strategic review by the Company,
including our Board – positioning Vistra to deliver strong,
consistent long-term earnings into the future, while investing in
our attractive retail and zero-carbon businesses and returning a
significant amount of our free cash flow to shareholders on an
annual basis. We believe in the value of this company and will
continue to take actions to rectify the significant undervaluation
of our stock."
Details on the Preferred Stock
The annual dividend
rate on each share of Preferred Stock is 8.0% from the original
issuance date to, but excluding, Oct. 15,
2026 (the "First Reset Date"). On and after the First Reset
Date, the dividend rate on each share of Preferred Stock shall
equal the five-year U.S. Treasury rate as of the most recent reset
dividend determination date (subject to a floor of 1.07%), plus a
spread of 6.93% per annum. The Preferred Stock has a liquidation
preference of $1,000 per share, plus
accumulated but unpaid dividends. Cumulative cash dividends on the
Preferred Stock are payable semiannually, in arrears, on each
April 15 and Oct. 15, commencing on April 15, 2022, when, as and if declared by the
Company's Board.
The Preferred Stock is not convertible into or exchangeable for
any other securities of the Company and will have limited voting
rights. The Preferred Stock may be redeemed at the option of the
Company in certain circumstances.
The Preferred Stock will not be registered under the Securities
Act or any state securities laws and may not be offered or sold in
the U.S. absent registration or an applicable exemption from such
registration requirements.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the Preferred Stock, nor shall
there be any sale of the Preferred Stock in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction.
About Vistra
Vistra (NYSE: VST) is a leading, Fortune 275 integrated retail
electricity and power generation company based in Irving, Texas, providing essential resources
for customers, commerce, and communities. Vistra combines an
innovative, customer-centric approach to retail with safe,
reliable, diverse, and efficient power generation. The company
brings its products and services to market in 20 states and the
District of Columbia, including
six of the seven competitive wholesale markets in the U.S. and
markets in Canada and Japan, as well. Serving nearly 4.3 million
residential, commercial, and industrial retail customers with
electricity and natural gas, Vistra is one of the largest
competitive residential electricity providers in the country and
offers over 50 renewable energy plans. The company is also the
largest competitive power generator in the U.S., with a capacity of
approximately 39,000 megawatts powered by a diverse portfolio,
including natural gas, nuclear, solar, and battery energy storage
facilities. In addition, Vistra is a large purchaser of wind power.
The company owns and operates a 400-MW/1,600-MWh battery energy
storage system in Moss Landing,
California, the largest of its kind in the world. Vistra is
guided by four core principles: we do business the right way, we
work as a team, we compete to win, and we care about our
stakeholders, including our customers, our communities where we
work and live, our employees, and our investors.
Cautionary Note Regarding Forward-Looking
Statements
The information presented herein includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements, which are based on current expectations, estimates and
projections about the industry and markets in which Vistra Corp.
("Vistra") operates and beliefs of and assumptions made by Vistra's
management, involve risks and uncertainties, which are difficult to
predict and are not guarantees of future performance, that could
significantly affect the financial results of Vistra. All
statements, other than statements of historical facts, that are
presented herein, or in response to questions or otherwise, that
address activities, events or developments that may occur in the
future, including such matters as activities related to our
financial or operational projections, the potential impacts of the
COVID-19 pandemic on our results of operations, financial condition
and cash flows, projected synergy, value lever and net debt
targets, capital allocation, capital expenditures, liquidity,
projected Adjusted EBITDA to free cash flow conversion rate,
dividend policy, business strategy, competitive strengths, goals,
future acquisitions or dispositions, development or operation of
power generation assets, market and industry developments and the
growth of our businesses and operations (often, but not always,
through the use of words or phrases, or the negative variations of
those words or other comparable words of a future or
forward-looking nature, including, but not limited to: "intends,"
"plans," "will likely," "unlikely," "believe," "confident",
"expect," "seek," "anticipate," "estimate," "continue," "will,"
"shall," "should," "could," "may," "might," "predict," "project,"
"forecast," "target," "potential," "goal," "objective," "guidance"
and "outlook"),are forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking
statements. Although Vistra believes that in making any such
forward-looking statement, Vistra's expectations are based on
reasonable assumptions, any such forward-looking statement involves
uncertainties and risks that could cause results to differ
materially from those projected in or implied by any such
forward-looking statement, including, but not limited to: (i)
adverse changes in general economic or market conditions (including
changes in interest rates) or changes in political conditions or
federal or state laws and regulations; (ii) the ability of Vistra
to execute upon its contemplated strategic, capital allocation,
performance, and cost-saving initiatives and to successfully
integrate acquired businesses; (iii) actions by credit ratings
agencies; (iv) the severity, magnitude and duration of pandemics,
including the COVID-19 pandemic, and the resulting effects on our
results of operations, financial condition and cash flows; (v) the
severity, magnitude and duration of extreme weather events
(including winter storm Uri), contingencies and uncertainties
relating thereto, most of which are difficult to predict and many
of which are beyond our control, and the resulting effects on our
results of operations, financial condition and cash flows; and (vi)
those additional risks and factors discussed in reports filed with
the Securities and Exchange Commission by Vistra from time to time,
including the uncertainties and risks discussed in the sections
entitled "Risk Factors" and "Forward-Looking Statements" in
Vistra's annual report on Form 10-K for the year ended December 31, 2020 and any subsequently filed
quarterly reports on Form 10-Q.
Any forward-looking statement speaks only at the date on which
it is made, and except as may be required by law, Vistra will not
undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is made
or to reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible to predict all of
them; nor can Vistra assess the impact of each such factor or the
extent to which any factor, or combination of factors, may cause
results to differ materially from those contained in any
forward-looking statement.
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SOURCE Vistra Corp.