10-K: Sempra Details Capital Stock and Debt Securities in SEC Filing

Sempra's recent SEC filing provides a detailed description of its registered capital stock, including common stock and debt securities, as well as preferred stock not registered under the Exchange Act.

Summary

• Sempra has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934: common stock and 5.75% junior subordinated notes due 2079.
• Sempra also has outstanding shares of 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, which are not registered under Section 12 of the Exchange Act.
• The total number of shares of all classes of capital stock that Sempra is authorized to issue is 1,175,000,000, of which 1,125,000,000 are shares of common stock and 50,000,000 are shares of preferred stock.
• At December 31, 2023, 900,000 shares were designated as series C preferred stock, all of which were outstanding but were not registered under Section 12 of the Exchange Act.
• Holders of common stock are entitled to receive dividends as declared by the Board of Directors, subject to the rights of preferred stock holders.
• In the event of liquidation, common stock holders are entitled to receive remaining assets after the discharge of liabilities, subject to the rights of preferred stock holders.
• Each common stock holder is entitled to one vote per share, subject to the voting rights of preferred stock holders.
• The Board of Directors is authorized to amend the Bylaws with a two-thirds vote, and shareholders can amend the Bylaws with the approval of the outstanding shares.
• Sempra's common stock is listed on the New York Stock Exchange under the symbol SRE and the Mexican Stock Exchange under the symbol SRE.MX.
• The series C preferred stock ranks senior to common stock and junior to existing and future indebtedness and other liabilities.
• Sempra may redeem the series C preferred stock at $1,000 per share on specific dates or at $1,020 per share in the event of a Ratings Event.
• Dividends on the series C preferred stock are payable semi-annually at a fixed rate of 4.875% per annum until October 15, 2025, and then at a rate equal to the Five-year U.S. Treasury Rate plus a spread of 4.550%.
• The series C preferred stock does not have voting rights, except in the event of non-payment of dividends for three or more semi-annual dividend periods.
• The series C preferred stock is not convertible to any other security and does not contain any sinking fund or redemption provisions.
• The notes are subject to early redemption at our option as described under Redemption Optional Redemption below.
• The notes bear interest at the rate of 5.75% per year, payable quarterly in arrears.
• Sempra may defer interest payments on the notes for up to 40 consecutive quarterly interest payment periods, but no such deferral period may extend beyond the final maturity date of the notes.
• The notes are our unsecured obligations and rank junior and subordinate in right of payment to our existing and future Senior Indebtedness.
• At December 31, 2023, we had outstanding Senior Indebtedness of approximately $10 billion.
• At December 31, 2023, our subsidiaries had outstanding total indebtedness and liabilities owed to unaffiliated third parties of approximately $43 billion and total liabilities owed to us of approximately $553 million.
• The notes are effectively subordinated in right of payment to any secured indebtedness that we have or may incur and to all indebtedness and other liabilities of our subsidiaries.
• The notes do not contain any conversion rights or sinking fund provisions.

Sentiment

Score: 6

Explanation: The document is factual and descriptive, providing necessary details about Sempra's securities. The sentiment is neutral, as it is a formal disclosure rather than a promotional piece.

Positives

• The document provides a clear and detailed description of Sempra's capital structure and debt obligations.
• The document outlines the rights and preferences of both common and preferred stock holders.
• The document details the terms of the 5.75% junior subordinated notes, including interest payment and deferral options.
• The document provides information on the redemption options for the series C preferred stock.

Negatives

• The document highlights the subordinated nature of the notes to Sempra's senior indebtedness and the indebtedness of its subsidiaries.
• The document notes that the series C preferred stock does not have voting rights, except in the event of non-payment of dividends for three or more semi-annual dividend periods.
• The document notes that Sempra may defer interest payments on the notes for up to 40 consecutive quarterly interest payment periods.

Risks

• The notes are unsecured obligations and are subordinated to Sempra's senior indebtedness and the indebtedness of its subsidiaries.
• Sempra has the option to defer interest payments on the notes for extended periods.
• The series C preferred stock has limited voting rights and is not convertible to any other security.
• The series C preferred stock is structurally subordinated to any existing and future indebtedness and other liabilities of our subsidiaries and capital stock of our subsidiaries held by third parties.

Future Outlook

The document does not contain any specific forward-looking statements or guidance.

Industry Context

This document provides a detailed look at Sempra's capital structure and debt obligations, which is typical for a company in the energy infrastructure sector. The details on the various types of securities and their terms are important for investors to understand the company's financial position and risk profile.

Comparison to Industry Standards

• The use of subordinated notes is a common practice in the energy sector, particularly for companies with significant capital needs. Companies like Kinder Morgan and Enbridge also utilize subordinated debt to finance their operations and projects.
• The terms of Sempra's preferred stock, including the redemption options and dividend structure, are similar to those of other utility companies such as Duke Energy and Southern Company.
• The interest rate and deferral options on Sempra's notes are comparable to those offered by other companies in the energy sector, such as Williams Companies and Energy Transfer Partners.
• The subordination of the notes to senior indebtedness is a standard feature in debt offerings, reflecting the risk hierarchy in capital structures.

Stakeholder Impact

• Shareholders: The document provides information about the rights and preferences of common and preferred stock holders.
• Creditors: The document details the terms of the notes and their subordination to senior indebtedness.
• Potential Investors: The document provides a detailed description of Sempra's capital structure and debt obligations, which is important for investment decisions.

Key Dates

Keywords

capital stock, debt securities, common stock, preferred stock, junior subordinated notes, dividends, liquidation rights, voting rights, redemption, interest payments, subordination, senior indebtedness