TXNM ENERGY INC 8-K

What Happened

• TXNM Energy, Inc. announced that holders of its 5.75% Junior Subordinated Convertible Notes due 2054 may convert those notes from January 1, 2026 through the close of business March 31, 2026 (the First Quarter 2026 Conversion Period). The conversion rate is 22.5248 shares of common stock per $1,000 principal (equivalent to a conversion price of about $44.40 per share).
• Upon conversion during this period, the Company will deliver (a) an equal aggregate principal amount of a newly issued series of 5.75% non-convertible junior subordinated notes due 2054 (in book-entry form) in lieu of the converting principal amount, and (b) shares of common stock (and cash in lieu of fractional shares), if any, for the remainder of the conversion obligation determined over a 60-trading-day observation period. Holders converting will not receive cash for the principal amount converted—only the non-convertible notes up to that principal amount.

Key Details

• Conversion rate and effective price: 22.5248 shares per $1,000 principal → ≈ $44.40 per share.
• Conversion window: January 1, 2026 through March 31, 2026. Convertibility was triggered because the stock met the 130% price threshold for the required trading-day test ending December 31, 2025.
• Consideration on conversion: converting holders receive newly issued 5.75% non-convertible junior subordinated notes (due June 1, 2054) up to the converted principal amount; any conversion obligation in excess is paid in common stock (plus cash for fractional shares).
• Merger note: the Company has a pending merger agreement (with affiliates of Blackstone). If the merger closes as a “make-whole fundamental change,” holders could instead receive cash equal to the conversion rate multiplied by the merger price of $61.25 per share (subject to closing and conditions).

Why It Matters

• For convertible note holders: exercising conversion now will exchange convertible claims for less-liquid, non-convertible subordinated notes for the principal portion—these notes may trade below par and have terms less favorable than newer issuances (the company recently issued higher-rate junior notes). That affects liquidity and interest return for holders who convert.
• For common shareholders and investors: conversions can lead to issuance of common shares for any excess conversion obligation above converted principal, which can dilute equity. The conversion trigger also signals the company’s stock has been trading above the threshold that allows conversion.
• For everyone: a completed merger would change conversion treatment to a cash payout at $61.25 per share (if the merger closes and the make-whole conversion right applies). The merger is subject to customary conditions and regulatory approvals and may not occur.