Evergy announced it will repurchase $244.1 million of its 4.50% convertible notes due 2027, paying a total of $302.5 million including accrued interest. The transaction will reduce the outstanding principal of the notes to $1.1559 billion.
The repurchase is part of Evergy’s strategy to lower future interest expense and improve its debt‑to‑equity profile. At the time of the announcement, the company’s debt‑to‑equity ratio was 1.43 and its interest coverage was 2.53, indicating a high leverage position and limited cushion against rising rates. By retiring a quarter of the convertible debt, Evergy expects to cut annual interest payments by roughly $11 million (4.50% of $244.1 million) and to bring the ratio closer to industry norms.
The transaction also aligns with Evergy’s broader capital‑structure plan following a November 2023 downgrade by S&P. The downgrade highlighted weakened financial measures, including the high debt load relative to earnings. Reducing the convertible balance signals management’s commitment to restoring credit quality and preserving flexibility for future investments in renewable generation and grid modernization.
Convertible note holders may engage in hedging activities, such as shorting the company’s shares, which can create temporary volatility in the equity price. However, the primary focus of the transaction is the long‑term benefit of a leaner balance sheet and lower financing costs.
The repurchase is expected to be completed shortly after the measurement period that began on January 7, 2026, subject to customary closing conditions. The cash outlay of $302.5 million will be funded from the company’s operating cash flow, which has remained robust in recent quarters, supporting the feasibility of the transaction without compromising dividend policy or capital expenditures.
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