BHE Shareholders' Equity

12 Months Ended

Dec. 31, 2024

Stockholders' Equity Note [Abstract]

BHE Shareholders' Equity

BHE Shareholders' Equity

Preferred Stock

As of December 31, 2024, BHE had 481,000 shares outstanding of its Perpetual Preferred Stock (the "4% Perpetual Preferred Stock"), which were issued to a subsidiary of Berkshire Hathaway. The 4% Perpetual Preferred Stock has a liquidation preference of $1,000 per share and currently pays a 4.00% dividend per share on the liquidation preference. Dividends shall accrue and accumulated daily, be cumulative, compounded semi-annually and, if declared, be payable in cash semi-annually in arrears on May 15 and November 15 of each year. If dividends are not declared and paid, any accumulating dividends shall continue to accumulate and compound. BHE may not make any dividends on shares of any other class or series of its capital stock (other than for dividends on shares of common stock payable in shares of common stock, unless the holders of the then outstanding 4% Perpetual Preferred Stock shall first receive, or simultaneously receive, a dividend in an amount at least equivalent to the amount accumulated and not previously paid. BHE may not declare or pay any dividends on shares of the 4% Perpetual Preferred Stock if such declaration or payment would constitute an event of default on BHE's senior indebtedness (as defined). BHE may, at its option, redeem the 4% Perpetual Preferred Stock in whole or in part at any time at a price per share equal to the liquidation preference.

Common Stock

In December 2024, BHE filed its Fourth Amended and Restated Articles of Incorporation with the Secretary of the State of Iowa, which, among other things, reverse split all of the issued and then-outstanding shares of Common Stock of BHE, no par value (the "Common Stock"), in the aggregate, into one share of the Common Stock and reduced the number of authorized shares of the Common Stock to 100.

In September 2024, BHE repurchased 4,424,494 shares of its voting common stock held by certain family members and related or affiliated entities of the late Mr. Walter Scott, Jr., a former member of BHE's Board of Directors (each, a "Minority Shareholder") and acquired, cancelled and extinguished the Junior Subordinated Debenture due 2057, having an aggregate principal amount of $100 million, issued by BHE to a certain Minority Shareholder on June 19, 2017 (the "Debenture") (collectively, the "Transactions"). Consideration for the Transactions consisted of (i) cash in an aggregate amount of $2.4 billion and (ii) a Promissory Note, due and payable on September 30, 2025, having an aggregate principal amount of $600 million, which was fully repaid plus accrued interest in October 2024.

In June 2022, BHE repurchased 740,961 shares of its common stock held by Mr. Gregory E. Abel, BHE's Chair, for $870 million. The purchase was pursuant to the terms of BHE's Shareholders Agreement.

BHE B Merger

In December 2024, BHE entered into an agreement and plan of merger ("Merger Agreement") with BHE B, a wholly owned subsidiary of Berkshire Hathaway. BHE B (the "Disappearing Company") merged with and into BHE with BHE surviving (the "Merger"). The Merger was accounted for at book value as BHE and BHE B are entities under common control. BHE B owned eight investments in wind-powered generating facilities sponsored by third parties, commonly referred to as tax equity investments, and had net assets as of December 31, 2024, of approximately $1 billion.

Pursuant to the terms and conditions in the Merger Agreement, at the effective time of the Merger, which took place at 10:59 p.m., Central Time, on December 31, 2024, (a) the separate existence of the Disappearing Company ceased and each share of Common Stock, $0.0001 par value, of the Disappearing Company was cancelled and (b) all shares of the issued and outstanding Preferred Stock, $0.01 par value, of the Disappearing Company, which were held by the BHE B Sole Preferred Stockholder, were converted into and became exchangeable in the aggregate for (i) 481,000 shares of the 4% Perpetual Preferred Stock, (ii) an amount in cash of $57 million and (ii) the transfer of a U.S. Treasury Bill of $364 million.

Restricted Net Assets

BHE has maximum debt-to-total capitalization percentage restrictions imposed by its senior unsecured credit facilities expiring in June 2027 which, in certain circumstances, limit BHE's ability to make cash dividends or distributions. As a result of this restriction, BHE has restricted net assets of $23.3 billion as of December 31, 2024.

Certain of BHE's subsidiaries have restrictions on their ability to dividend, loan or advance funds to BHE due to specific legal or regulatory restrictions, including, but not limited to, maximum debt-to-total capitalization percentages and commitments made to state commissions. As a result of these restrictions, BHE's subsidiaries had restricted net assets of $25.3 billion as of December 31, 2024.