Stem, Inc. Announces Pricing of Upsized Offering of $200 Million 4.25% Green Convertible Senior Notes Due 2030
Stem, Inc. ("Stem") (NYSE: STEM) announced today the pricing of $200 million aggregate principal amount of 4.25% Green Convertible Senior Notes due 2030 (the "Notes") in a private offering (the "Offering"), which was upsized from the previously announced $175 million offering, to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). In connection with the Offering, Stem has granted the initial purchasers of the Notes an option to purchase, for settlement within a 13-day period from, and including, the date when the Notes are first issued, up to an additional $40 million aggregate principal amount of the Notes on the same terms and conditions. The sale of the Notes to the initial purchasers is expected to settle on April 3, 2023, subject to customary closing conditions.
When issued, the Notes will be senior, unsecured obligations of Stem. The Notes will accrue interest payable semi-annually in arrears and will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. The Notes will be convertible based on an initial conversion rate of 140.3066 shares of Stem's common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $7.13 per share of common stock, which represents a conversion premium of approximately 27.50% to the last reported sale price of Stem's common stock on The New York Stock Exchange (the "NYSE") on March 29, 2023). The Notes will be convertible upon the satisfaction of specified conditions into cash, shares of common stock of Stem or a combination thereof, with the form of consideration to be determined at Stem's election. The Notes will be redeemable, in whole or in part, for cash at Stem's option at any time, and from time to time, on or after April 5, 2027 and before the 45th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Stem's common stock exceeds 130% of the conversion price for a specified period of time.
In connection with the pricing of the Notes, Stem has entered into privately negotiated capped call transactions with one or more of the initial purchasers or their affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce potential dilution to Stem’s common stock upon any conversion of the Notes and/or offset any potential cash payments Stem is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions is initially $11.18 per share of common stock, which represents a premium of 100.0% to the last reported sale price of Stem’s common stock on the NYSE on March 29, 2023, and is subject to certain adjustments under the terms of the capped call transactions.
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