ATLANTA, May 20, 2025 /PRNewswire/ — Southern Company (NYSE: SO) has priced $1.45 billion in principal amount of its Series 2025A Convertible Senior Notes, marking a $200 million increase from its initial offering target. The notes, carrying a 3.25% annual interest rate and maturing on June 15, 2028, were issued in a private placement to qualified institutional buyers under SEC Rule 144A. The energy giant also granted underwriters a 13-day option to purchase an additional $200 million in notes. The transaction is slated to close by May 23, 2025, pending standard conditions.
The convertible notes feature an initial conversion rate of 8.8077 shares of Southern Company common stock per $1,000 principal—translating to a conversion price of approximately $113.54 per share. This represents a 25% premium over the stock’s closing price on May 20, 2025. Early conversion rights are limited until March 15, 2028, after which holders may convert notes at any time until two trading days before maturity. Conversions will be settled in cash, stock, or a combination, at the company’s discretion.
Southern Company anticipates net proceeds of $1.44 billion from the offering, or $1.63 billion if the underwriters’ option is fully exercised. Roughly $1.25 billion will be allocated to repurchasing legacy debt: $781.6 million of 3.875% Series 2023A Convertible Notes and $328.1 million of 4.50% Series 2024A Convertible Notes. The remaining funds will address commercial paper obligations and general corporate needs, potentially including subsidiary investments.
In parallel, the company has initiated private negotiations to buy back portions of its existing convertible notes from select holders—a maneuver contingent on stock price dynamics and market conditions. Southern noted that arbitrage-focused investors holding these notes may adjust their equity hedges, which could influence the stock’s volatility and the new notes’ effective conversion price.
While the offering aims to streamline Southern’s capital structure, uncertainties linger. The final scale and terms of the debt repurchases remain fluid, and market reactions to hedging activity could introduce short-term stock price volatility. The notes and underlying shares have not been registered under U.S. securities laws, restricting their sale to jurisdictions where exemptions apply.
About Southern Company
Southern Company serves 9 million customers across the Southeast through its portfolio of utilities, competitive energy arms, and infrastructure assets. Its operations span electricity generation, gas distribution, renewable energy, and telecommunications.
Forward-Looking Statements
This release contains forward-looking statements regarding the offering’s closure, fund allocation, and market impacts. Actual results may diverge due to macroeconomic shifts, interest rate fluctuations, credit rating changes, and unforeseen events. Investors are cautioned against overreliance on these projections, which are subject to risks detailed in the company’s SEC filings. Southern Company disclaims any obligation to update forward-looking information.
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