| Item 1.01. | Entry into a Material Definitive Agreement. |
Convertible Senior Notes
On August 4, 2023, CenterPoint Energy, Inc. (the “Company”) completed the sale of $1,000,000,000 aggregate principal amount of 4.25% Convertible Senior Notes due 2026 (the “Notes”), which included an additional $100,000,000 aggregate principal amount of Notes purchased pursuant to the full exercise of the option granted to the Initial Purchasers (as defined herein) pursuant to a Purchase Agreement (as defined herein). The Notes were sold in a private offering to the initial purchasers in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and were resold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act. The Notes were sold under a purchase agreement (the “Purchase Agreement”) dated August 1, 2023 among the Company and the initial purchasers (the “Initial Purchasers”) party thereto. The Notes and any Common Stock (as defined below) issuable upon any conversion of the Notes may be offered and resold only in transactions that are exempt from registration under the Securities Act and other applicable securities laws. The net proceeds from the sale of the $1,000,000,000 aggregate principal amount of Notes, after deducting estimated initial purchaser discounts and other offering expenses, were approximately $985.3 million.
The Company issued the Notes pursuant to an Indenture (the “Indenture”), dated as of August 4, 2023 by and between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee (the “Trustee”). The Notes will bear interest at a rate of 4.25% per year until maturity. Interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024. The Notes will mature on August 15, 2026, unless earlier converted or repurchased by the Company in accordance with their terms.
Prior to the close of business on the business day immediately preceding May 15, 2026, the Notes will be convertible only under certain conditions. On or after May 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time at the conversion rate then in effect, irrespective of the conditions. The Company may not redeem the Notes prior to the maturity date and no sinking fund is provided for the Notes.
Upon conversion of the Notes, the Company will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), or a combination of cash and shares of Common Stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Notes being converted. The conversion rate for the Notes will initially be 27.1278 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $36.86 per share of Common Stock). The initial conversion price of the Notes represents a premium of approximately 25.0% over the last reported sale price of the Common Stock on the New York Stock Exchange on August 1, 2023. Initially, a maximum of 33,909,700 shares of Common Stock may be issued upon conversion of the Notes based on the initial maximum conversion rate of 33.9097 shares of Common Stock per $1,000 principal amount of Notes. The conversion rate will be subject to adjustment in some events (as described in the Indenture) but will not be adjusted for any accrued and unpaid interest.
In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event. If the Company undergoes a fundamental change (as described in the Indenture) (other than an exempted fundamental change, as described in the Indenture), holders of the Notes may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Indenture provides for customary events of default, which include (subject in certain cases to grace and cure periods), among others: nonpayment of principal or interest when due and payable; breach of covenants or other agreements in the Indenture (including defaults under certain other indebtedness of the Company); and certain events of bankruptcy, insolvency or reorganization. Generally, if an event of default occurs and is continuing under the Indenture for 90 days after written notice, either the Trustee or the holders of at least 33% in aggregate principal amount of the Notes then outstanding may declare the principal amount plus accrued and unpaid interest on the Notes to be immediately due and payable.
The Notes will be senior unsecured obligations of the Company and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any
