Duke Energy 2015 Annual Report Download - page 49

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PART II
Pursuant to the Merger Agreement, upon the closing of the merger, each
share of Piedmont common stock issued and outstanding immediately prior to
the closing will be converted automatically into the right to receive $60 in cash
per share. In addition, Duke Energy will assume Piedmont’s existing debt, which
was approximately $1.9 billion at October 31, 2015, the end of Piedmont’s
most recent fiscal year. Duke Energy expects to finance the transaction with a
combination of debt, between $500 million and $750 million of newly issued
equity and other cash sources.
In connection with the Merger Agreement with Piedmont, Duke Energy
entered into a $4.9 billion senior unsecured bridge financing facility (Bridge
Facility) with Barclays Capital, Inc. (Barclays). The Bridge Facility, if drawn
upon, may be used to (i) fund the cash consideration for the transaction and (ii)
pay certain fees and expenses in connection with the transaction. In November
2015, Barclays syndicated its commitment under the Bridge Facility to a broader
group of lenders. Duke Energy intends to finance the transaction with proceeds
raised through the issuance of debt, equity and other sources as noted above
and, therefore, does not expect to draw upon the Bridge Facility.
The Federal Trade Commission (FTC) has granted early termination
of the 30-day waiting period under the federal Hart-Scott-Rodino Antitrust
Improvements Act of 1976. On January 22, 2016, shareholders of Piedmont
Natural Gas approved the company’s acquisition by Duke Energy. On January
15, 2016, Duke Energy filed for approval of the transaction and associated
financing requests with the NCUC. On January 29, 2016, the NCUC approved
the financing requests. On January 15, 2016, Duke Energy and Piedmont filed a
joint request with the Tennessee Regulatory Authority for approval of a change in
control of Piedmont that will result from Duke Energy’s acquisition of Piedmont.
In that request, Duke Energy and Piedmont requested that the Authority approve
the change in control on or before April 30, 2016. Subject to receipt of required
regulatory approvals and meeting closing conditions, Duke Energy and Piedmont
target a closing by the end of 2016.
On December 11, 2015, Duke Energy Kentucky filed a declaratory request
with the KPSC seeking a finding that the transaction does not constitute a
change in control of Duke Energy Kentucky requiring KPSC approval. Duke
Energy also presented the transaction for information before the PSCSC on
January 13, 2016.
The Merger Agreement contains certain termination rights for both Duke
Energy and Piedmont, and provides that, upon termination of the Merger
Agreement under specified circumstances, Duke Energy would be required
to pay a termination fee of $250 million to Piedmont and Piedmont would be
required to pay Duke Energy a termination fee of $125 million.
See Note 4 to the Consolidated Financial Statements, Regulatory
Matters,” for additional information regarding Duke Energy and Piedmont’s joint
investment in Atlantic Coast Pipeline, LLC.
Midwest Generation Exit
Duke Energy, through indirect subsidiaries, completed the sale of the
nonregulated Midwest generation business and Duke Energy Retail Sales LLC
(collectively, the Disposal Group) to a subsidiary of Dynegy on April 2, 2015, for
approximately $2.8 billion in cash. Refer to Note 2 to the Consolidated Financial
Statements, “Acquisitions and Dispositions,” for additional information on this
transaction.
Accelerated Stock Repurchase Program
On April 6, 2015, Duke Energy entered into agreements with each of
Goldman, Sachs & Co. and JPMorgan Chase Bank, National Association
(the Dealers) to repurchase a total of $1.5 billion of Duke Energy common
stock under an accelerated stock repurchase program (the ASR). Duke
Energy made payments of $750 million to each of the Dealers and was
delivered 16.6 million shares, with a total fair value of $1.275 billion,
which represented approximately 85 percent of the total number of shares
of Duke Energy common stock expected to be repurchased under the ASR.
The $225 million unsettled portion met the criteria to be accounted for
as a forward contract indexed to Duke Energy’s stock and qualified as an
equity instrument. The company recorded the $1.5 billion payment as a
reduction to common stock as of April 6, 2015. In June 2015, the Dealers
delivered 3.2 million additional shares to Duke Energy to complete the ASR.
Approximately 19.8 million shares, in total, were delivered to Duke Energy
and retired under the ASR at an average price of $75.75 per share. The
final number of shares repurchased was based upon the average of the
daily volume weighted average stock prices of Duke Energy’s common stock
during the term of the program, less a discount.
For additional information on the details of this transaction, see
Note 18 to the Consolidated Financial Statements, “Common Stock.”
Financial Results
2013
$2,665
$3,080
$1,883
$3,218
$2,816
$3,152
$4.54
$3.76
$4.36
$2.66
$4.55
$4.05
2014
Net Income Attributable to Duke Energy Corporation Net Income Attributable to Duke Energy Corporation common
stockholders per diluted share
Adjusted Earnings (a) Adjusted Diluted Earnings Per Share (a)
2015 2013 2014 2015
Annual Earnings (in millions) Annual Earnings Per Diluted Share
(a) See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted diluted earnings per share as well as a reconciliation of this non-GAAP financial measure to net income attributable to Duke
Energy and net income attributable to Duke Energy per diluted share.