American Electric Power Co., the Columbus, Ohio-based utility, said late Tuesday that it has lined up a $2.6 billion stock offering, a move that coincided with a roughly 3% drop in its share price in extended trading.
The company entered into two-year forward sale agreements with Bank of America, Goldman Sachs and Morgan Stanley, each serving as bookrunners for the equity placement. AEP reported its shares fell to $127.95 in after-hours trading on the announcement.
AEP said that upon settlement of the forward sale agreements it intends to deploy the net proceeds for general corporate purposes. The company specified examples of planned uses, including capital contributions to its regulated utility subsidiaries, potential acquisitions and repayment of debt.
Before the offering was announced, AEP had approximately 544.1 million shares outstanding and a market capitalization of about $71.8 billion. The timing of the announced agreements and the planned settlement was not further detailed in the company statement.
The equity move follows an internal planning shift last week in which AEP raised the size of its five-year capital investment program to $78 billion, citing increasing demand from data centers as a driver of elevated infrastructure needs. The company did not link specific portions of the new capital plan to the immediate stock offering in its announcement.
Market reaction was apparent in the after-hours session, where the company’s stock retreated roughly 3% to the $127.95 level. AEP identified Bank of America, Goldman Sachs and Morgan Stanley as the banks that will manage and underwrite the forward-sale transactions.
Beyond the immediate market move and the stated intended uses of proceeds, the company provided no additional operational or timing details for how the funds will be allocated among its listed purposes or how the offering interfaces with the recently expanded capital investment plan.