Item 1.01.
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Entry into a Material Definitive Agreement.
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On December 7, 2021, Vistra Corp., a Delaware corporation (the “Company” or the “Issuer”), entered into a purchase agreement (the “Purchase Agreement”), by and between the Company and Goldman Sachs & Co. LLC, as representative of the initial purchasers (the “Initial Purchasers”) named on Schedule I to the Purchase Agreement. The Purchase Agreement provides for the offer and sale (the “Offering”) by the Company, and the purchase by the Initial Purchasers, of 1,000,000 shares of the Company’s 7.0% Series B Fixed-Rate Reset Cumulative Redeemable Green Perpetual Preferred Stock (the “Series B Preferred Stock”).
The Offering closed on December 10, 2021. The sale of the shares of Series B Preferred Stock was not registered under the Securities Act of 1933, as amended (the “Securities Act”), and the shares of Series B Preferred Stock were sold on a private placement basis to persons reasonably believed to be qualified institutional buyers under Rule 144A under the Securities Act and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act.
The Purchase Agreement contains customary representations, warranties, covenants and agreements by the Company and the Initial Purchasers, including indemnification for certain liabilities under the Securities Act, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, and may be subject to limitations agreed upon by the parties thereunder.
The Company intends to use an amount equal to the net proceeds from the Offering, after deducting the Initial Purchasers’ discount and estimated Offering expenses, to pay for or reimburse the payment of, in whole or in part, existing and new eligible green projects in the United States in accordance with the criteria set forth in the Vistra Green Finance Framework (November 2021). Pending allocation of an amount equal to the net proceeds for such purposes, the Company intends to invest the balance of the net proceeds at its discretion as per the Company’s liquidity management policy, including in cash or cash equivalents, or in other liquid marketable instruments. Eligible green projects include disbursements made in the eighteen months prior to the issue date of the Series B Preferred Stock, or any time following the issuance date during the term of the Series B Preferred Stock. We intend to fully allocate the proceeds of the Offering within eighteen to twenty-four months from the date of the issuance.
The shares of Series B Preferred Stock were issued pursuant to a certificate of designation (the “Certificate of Designation”) filed with the Secretary of State of the State of Delaware on December 9, 2021. The Certificate of Designation classified a total of 1,000,000 shares of the Company’s authorized shares of preferred stock as Series B Preferred Stock.
As set forth in the Certificate of Designation, the Series B Preferred Stock will rank, with respect to anticipated semi-annual dividends and distributions upon the liquidation, winding-up or dissolution of the Company: (i) senior to any equity security, including the Company’s common stock, other than any equity security referred to in (ii) or (iii); (ii) on a parity with any equity security issued by the Company with terms specifically providing that such equity security ranks on a parity with the Series B Preferred Stock with respect to rights to the payment of dividends and/or distributions upon the liquidation, winding-up and dissolution of the Company’s affairs, as applicable; and (iii) junior to any equity security issued by the Company with terms specifically providing that such equity security ranks senior to the Series B Preferred Stock with respect to rights to the payment of dividends and/or distributions upon the liquidation, winding-up and dissolution of the Company’s affairs, as applicable. The annual dividend rate on each share of Series B Preferred Stock is 7.0% from December 10, 2021 to, but excluding, December 15, 2026 (the “First Reset Date”). On and after the First Reset Date, the dividend rate on each share of Series B 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 1.26%), plus a spread of 5.74% per annum. The Series B Preferred Stock has a liquidation preference of $1,000 per share, plus accumulated but unpaid dividends. Cumulative cash dividends on the Series B Preferred Stock are payable semi-annually, in arrears, on each June 15 and December 15, commencing on June 15, 2022, when, as and if declared by the Company’s Board of Directors.
At any time on or after the First Reset Date, the Company may redeem shares of the Series B Preferred Stock in whole or in part at a redemption price payable in cash of $1,000 per share of Series B Preferred Stock, plus an amount equal to all accumulated and unpaid dividends thereon to, but excluding, the redemption date, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and will be subject to compliance with the applicable provisions of the Company’s outstanding indebtedness.
Upon the occurrence of a Rating Event (as defined in the Certificate of Designation), the Company may, at its option, redeem the shares of Series B Preferred Stock in whole, but not in part, within 120 days after the conclusion of any review or appeal process instituted by the Company following the occurrence of a Rating Event at a redemption price payable in cash of $1,020 (102% of the liquidation preference) per share of Series B Preferred Stock, plus an amount equal to all accumulated and unpaid dividends thereon to, but excluding, the redemption date, whether or not declared.