Bloom Energy Corporation, listed under the symbol BE, launches a $350 million offering of 3% senior convertible green bonds due 2029. This transaction, aimed at institutional investors qualified under Rule 144A of the Securities Act of 1933, has been increased from the initial offer of $250 million. The issue and sale of the bonds is scheduled to close on May 29, 2024, subject to customary closing conditions.
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The senior unsecured bonds will bear interest at 3% p.a., payable semi-annually in arrears on June 1 and December 1, starting on December 1, 2024. The bonds will mature on June 1, 2029, unless redeemed, converted or repaid earlier. Before March 1, 2029, bondholders will be able to convert their bonds only in the event of certain events. From March 1, 2029, they can convert them at any time up to two trading days before the maturity date.
Conversion and redemption conditions
Bloom Energy will settle conversions in cash, Class A common shares or a combination of both, at its option. The initial conversion rate is 47.9795 Class A shares per $1,000 principal amount of bonds, corresponding to an initial conversion price of $20.84 per share, representing a 32.5% premium to the last price of $15.73 on May 23, 2024. The conversion rate and conversion price will be adjusted in the event of certain events.
Redemption options
The bonds will be redeemable, in whole or in part, for cash at Bloom Energy’s option at any time after June 7, 2027 and before the 21st trading day prior to the maturity date, but only if the sale price per share exceeds 130% of the conversion price during a specified period and if certain other conditions are met. In the event of redemption, holders will be able to convert their bonds during the associated conversion period, which will also constitute a “fundamental change with adjustment” for the bonds thus converted.
Allocation of funds and use of proceeds
Bloom Energy estimates that net proceeds from the offering will be approximately $338.8 million (or approximately $389.7 million if the initial purchasers’ option to purchase additional bonds is exercised in full), after deducting initial purchasers’ rebates and commissions and estimated offering expenses. The company plans to use approximately $141.8 million of these proceeds to redeem $115 million of its 2.5% senior green convertible bonds due 2025 in private transactions negotiated in parallel with the offering price.
Eligible projects and sustainability criteria
Bloom Energy will use the remaining net proceeds for general purposes, including research and development, sales and marketing activities, general administrative matters and capital expenditures, all related to projects meeting the “Eligibility Criteria” defined in the Offer Disclosure. The company intends to allocate an amount equal to the net proceeds from the sale of the bonds to refinance or finance, in whole or in part, new or ongoing projects meeting these criteria.
