Dominion forward-sells shares to obtain equity on demand

Virginia-based energy company Dominion has forward-sold 10 million shares of its common stock in a block trade to JP Morgan Securities. The deal was done in connection with a forward-sale agreement between Dominion and investment bank Merrill Lynch. It is set up so that Dominion only issues the stock and receives proceeds when it needs them to fund certain purchases. Only a handful of such forward transactions have been executed to date, said Dominion treasurer Scott Hetzer.

Dominion expects to use this equity capital to complete the purchase of the Kewaunee nuclear plant in Wisconsin, for which it has offered $220 million. The capital will also fund the proposed acquisition of three power plants from USGen New England (see story, September 8). The company also intends to use the cash to continue its buyout of additional over-market power supply contracts at its Dominion Virginia Power subsidiary.

Merrill agreed to borrow and sell 10 million Dominion shares –