NextEra Energy Partners, a renewable energy company, faces a challenge in corporate finance due to a decline in stock price last year. The company is considering options on how to pay for billion-dollar buyback options.

NextEra Energy Partners, a so-called YieldCo that acquires assets and distributes cash to shareholders, is primarily controlled by NextEra Energy, a clean energy powerhouse. The company is publicly traded and has been struggling with declining share prices since last year, partly due to reduced expectations for future stock growth.

"One option for overcoming this challenge is raising capital from private investors," says John Ketchum, CEO of NextEra Energy Partners. "These discussions are making progress," he said during a conference call.

The Decline in NextEra's Share Price Has Shaken the Assumptions Underlying the Financing. In the past, NextEra financed the acquisition of assets with so-called Convertible Equity Portfolio Financings (CEPFs), which are unique to the company.

These CEPFs offered NextEra several financial advantages. They were not recorded as debt on the balance sheet and offered an efficient way to issue shares in the future.

Lower Stock Prices Make it Harder for NextEra to Buy Back Investors Under These Conditions. The Company has Buyback Options Due in 2026 Worth $3.5 Billion.

NextEra announced in May the sale of pipeline assets to finance its CEPF deal buybacks through 2025. However, it has not yet disclosed a buyer for the second pipeline, the Meade Pipeline.

In addition to raising capital from private investors, NextEra is also considering other financing options for its remaining buybacks, such as issuing bonds or modifying contract terms with existing CEPF investors.

It is expected that NextEra will announce a plan by the end of the year to address its remaining buyback options to alleviate investor concerns. Private investors are likely to offer to finance a portion of the remaining buybacks, according to analysts.