CENTERPOINT ENERGY INC
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
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Jun 30, 2024 · Filed Jul 30, 2024
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(10) Equity Securities and Indexed Debt Securities (ZENS)
(10)Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy)
(a) Equity Securities
Gains and losses on equity securities, net of transaction costs, are recorded in Gain (loss) on equity securities in CenterPoint Energy’s Condensed Statements of Consolidated Income. The following table presents unrealized gains (losses), net on equity securities owned by CenterPoint Energy for each period presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| (in millions) | ||||
| AT&T Common | $15 | $(34) | $24 | $(25) |
| Charter Common | 7 | 9 | (78) | 25 |
| WBD Common | (3) | (6) | (10) | 8 |
| Other | — | — | — | (1) |
| Total gains (losses) on equity securities, net | $19 | $(31) | $(64) | $7 |
CenterPoint Energy and its subsidiaries hold shares of certain securities detailed in the table below, which are classified as trading securities. Shares of AT&T Common, Charter Common and WBD Common are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. The following table presents information on CenterPoint Energy’s equity securities for each period presented:
| Shares Held · Carrying Value | ||||||
|---|---|---|---|---|---|---|
| June 30, 2024 · December 31, 2023 · June 30, 2024 · December 31, 2023 | ||||||
| (in millions) | ||||||
| AT&T Common | 10,212,945 | 10,212,945 | $195 | $171 | ||
| Charter Common | 872,503 | 872,503 | 261 | 339 | ||
| WBD Common | 2,470,685 | 2,470,685 | 18 | 28 | ||
| Other | 3 | 3 | ||||
| Total | $477 | $541 | ||||
(b) ZENS
In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of June 30, 2024. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events.
CenterPoint Energy’s reference shares for each ZENS consisted of the following:
| June 30, 2024 | December 31, 2023 | |
|---|---|---|
| (in shares) | ||
| AT&T Common | 0.7185 | 0.7185 |
| Charter Common | 0.061382 | 0.061382 |
| WBD Common | 0.173817 | 0.173817 |
CenterPoint Energy pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of June 30, 2024, the ZENS, having an original principal amount of $828 million and a contingent principal amount of $13 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.
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