MDU Resources funds capex with US$200m raise
After recently upping capex, MDU Resources eased into the market overnight on Wednesday with a US$200m follow-on offering, opting to structure the deal as a forward sale to allow it to match dilution to funding need.
Wells Fargo, Bank of America and JP Morgan priced 10.2m borrowed shares at US$19.70, the bottom of the US$19.70–$20 marketing range and 2.7% discount to the US$20.24 last sale.
The banks were multiple-times covered, allowing them to place 70% of the shares sold with 10 institutions and 95% with the top 25.
The regulated utility’s shares broke offer to close Thursday’s session at US$19.46 – easy borrow as index-huggers BlackRock and Vanguard own 20%-plus combined but heavy trading is not unexpected in the context of a utility and overnight execution.
MDU late last month said it planned to spend US$3.4bn on capex from 2026 to 2030, an increase from the US$3.1bn 2025–2029 capex plan. At the time, the utility flagged US$150m–$175m of equity issuance in 2026 and US$100m–$125m in 2027 to support that capex.
The forward is structured with a two-year tenor, providing flexibility to issue stock as money is required to fund capex. The only rub is that proceeds realised would be lowered by the current 14-cent quarterly stock dividend.
In addition to the forward stock sale, MDU has a US$400m ATM programme it filed in August that remains untapped.
MDU, which takes its name from the original Montana-Dakota Utilities, among other projects is planning to build the 250-megawatt Badger Wind farm. The utility purchased a 49% interest in the project earlier this year from Orsted.