Whirlpool Corporation's shares declined roughly 7% following the release of plans to conduct simultaneous underwritten public offerings of common stock and depositary shares that would raise approximately $800 million.
The structure of the transaction will pair regular common stock with depositary shares, each of which will represent a 1/20th interest in newly issued Series A Mandatory Convertible Preferred Stock. The preferred stock will carry a par value of $1.00 per share. Underwriters will be given a 30-day option to buy additional shares to cover potential over-allotments.
Whirlpool stated it intends to deploy the net proceeds to repay a portion of amounts outstanding under its revolving credit facility and to fund general corporate needs. The company specifically identifies strategic investments in vertical integration and automation among the intended uses.
The Preferred Stock is expected to include a liquidation preference of $1,000 per share. Unless an earlier conversion occurs, each share of the Preferred Stock will automatically convert on or about February 15, 2029 into a variable number of common shares determined by the applicable conversion rate. Correspondingly, each Depositary Share will convert into a proportional fractional interest in common stock.
Holders of the Depositary Shares will receive a proportional fractional interest in the rights and preferences of the Preferred Stock. Those rights and preferences include conversion, dividend, liquidation and voting rights, all subject to the terms of a deposit agreement. Specifics such as the dividend rate, conversion terms and other particulars will be set at pricing.
At present, there is no public market for the Depositary Shares or the Preferred Stock. Whirlpool plans to apply to list the Depositary Shares on the New York Stock Exchange under the symbol "WHR.PRA."
This announcement triggered the stock decline as investors digested the potential effects of the equity issuance and the conversion mechanics tied to the mandatory convertible preferred structure. The company's stated financing objectives focus on reducing outstanding borrowings under its revolver and supporting capital allocation toward operational initiatives flagged by management.
Key terms that remain undetermined and that will be resolved at pricing include the dividend rate and the precise conversion mechanics that determine how many common shares each preferred share will ultimately become. The offering also includes the customary over-allotment option for underwriters, which can affect the total amount of securities issued.