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Preferred Stock
9 Months Ended
Sep. 30, 2017
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]  
Preferred Stock [Text Block]
12. PREFERRED STOCK
Series A Mandatory Convertible Preferred Stock
On May 29, 2016, Great Plains Energy entered into a stock purchase agreement with OMERS, pursuant to which Great Plains Energy will issue and sell to OMERS 750,000 shares of Series A Preferred Stock, for an aggregate purchase price equal to $750 million at the closing of the Original Merger Agreement.
In July 2017, as a result of the Amended Merger Agreement, Great Plains Energy and OMERS terminated their stock purchase agreement for the Series A Preferred Stock. As a result of this termination, Great Plains Energy recorded $15 million of previously deferred offering fees to non-operating expenses in the third quarter of 2017.
Series B Mandatory Convertible Preferred Stock
Great Plains Energy's Series B Preferred Stock contained an acquisition termination redemption option whereby in the event that the Original Merger Agreement was terminated or if Great Plains Energy determined in its reasonable judgment that the acquisition of Westar would not close or if the acquisition of Westar had not closed by November 30, 2017, then Great Plains Energy could at its sole option (but was not required to) redeem all of the Series B Preferred Stock. If exercised, the redemption price would be equal to either:
(a) $1,000 per share plus accumulated and unpaid dividends up to the redemption date; or
(b) if the average price of Great Plains Energy's common stock exceeded a certain threshold amount, then a repurchase price that is equal to a make-whole formula.
The Series B Preferred Stock also contained a fundamental change conversion option whereby upon the occurrence of certain events deemed to be a fundamental change, including an acquisition, liquidation, or delisting of Great Plains Energy common stock, holders of the Series B Preferred Stock could:
(a) convert their existing shares into shares of Great Plains Energy common stock; and
(b) receive a dividend make-whole payment.
As a result of the Amended Merger Agreement, Great Plains Energy determined in its reasonable judgment that the acquisition of Westar would not close and exercised its acquisition termination redemption option and redeemed the Series B Preferred Stock in August 2017. The Series B Preferred Stock was redeemed at a redemption price that was equal to a make-whole formula set forth in the terms of the Series B Preferred Stock. The total cost of the redemption was $963.4 million. Great Plains Energy made the entire redemption payment in cash.
The dividend make-whole provisions within both the acquisition termination redemption and fundamental change conversion options discussed above represented embedded derivatives that in accordance with GAAP, were accounted for on a combined basis separately from the Series B Preferred Stock and reported at fair value. The fair value of the Series B Preferred Stock dividend make-whole provisions at inception and December 31, 2016 was insignificant. As part of the $963.4 million redemption of the Series B Preferred Stock, the Series B Preferred Stock dividend make-whole provisions liability was settled in August 2017. For the three months ended and year to date September 30, 2017, Great Plains Energy recognized a loss of $67.7 million and $124.8 million, respectively, for the settlement of these provisions, which is recorded within loss on Series B Preferred Stock dividend make-whole provisions on the consolidated statements of comprehensive income (loss).
Great Plains Energy also recognized a redemption premium of $2.4 million in connection with the redemption of the Series B Preferred Stock for the three months ended and year to date September 30, 2017. This premium is represented as the difference between the redemption cost of $963.4 million and the $836.2 million carrying value of the Series B Preferred Stock, less the $124.8 million paid to settle the Series B Preferred Stock dividend make-whole provisions. The redemption premium is recorded as a reduction to earnings (loss) available for common shareholders and is recorded within preferred stock dividend requirements and redemption premium on the consolidated statements of comprehensive income (loss).