Bloom Energy Corporation Prices Upsized $350.0 Million Green Convertible Senior Notes Offering

Rhea-AI Summary

Bloom Energy (NYSE: BE) has announced the pricing of its upsized $350 million Green Convertible Senior Notes offering. The notes, set to mature in 2029, carry a 3.00% annual interest rate and are convertible into Class A common stock under certain conditions. The initial conversion price is approximately $20.84 per share, a 32.5% premium over the current share price. The offering size was increased from the previously announced $250 million. Settlement is expected on May 29, 2024. Net proceeds are estimated at $338.8 million, with $141.8 million allocated to repurchase outstanding 2025 notes and the rest for corporate purposes. The notes are redeemable under specific conditions and provide rights for repurchase by noteholders in case of a fundamental change.

Positive

• Upsized offering from $250 million to $350 million indicates strong demand.
• 3.00% annual interest rate is relatively low, reducing interest burden.
• Initial conversion price of $20.84 per share represents a 32.5% premium, showing investor confidence.
• Net proceeds of approximately $338.8 million bolster liquidity.
• Allocation of $141.8 million to repurchase existing 2025 notes improves debt structure.
• Funds to be used for R&D, sales, marketing, and capital expenditures, supporting growth.

Negative

• Convertible notes may lead to share dilution if converted to equity.
• Interest payments increase financial obligations.
• Uncertainty related to the specific definition of 'Eligibility Criteria' for fund allocation.
• Potential market impact due to hedge unwinding by holders of repurchased 2025 notes.
• Redemption and conversion conditions may complicate financial forecasting.

Financial Analyst

The issuance of $350 million in green convertible senior notes by Bloom Energy offers several insights into the company's current financial strategy. The most prominent observation is the upsizing of the offering from $250 million to $350 million, indicating higher-than-expected demand from institutional investors. Convertible notes are a hybrid between debt and equity, which can ease the cash flow burden on Bloom Energy since interest rates are generally lower compared to traditional debt.

The notes offer a 3.00% annual interest rate, relatively low, but include a conversion option that provides investors the opportunity to convert debt into equity at a conversion price of $20.84 per share, a 32.5% premium over the last reported share price. This not only mitigates the dilutive impact on current shareholders but also aligns investor interests with the company's long-term growth potential.

The allocation of the proceeds is particularly noteworthy. Approximately $141.8 million is earmarked for repurchasing $115 million of existing 2.50% convertible notes due in 2025, effectively refinancing existing debt under more favorable terms.

Market Research Analyst

Bloom Energy's decision to issue green convertible senior notes reflects a broader trend towards environmentally sustainable financing. These notes are earmarked for financing or refinancing projects that meet specific eligibility criteria related to sustainability, a factor that could appeal to ESG-focused (environmental, social and governance) investors. The lower interest rate of 3.00% is likely leveraged due to the 'green' nature of the issuance, which often sees higher demand in the current market.

This move is strategic in positioning Bloom Energy as a forward-thinking company committed to sustainable business practices, potentially attracting a new cohort of 'green' investors. Furthermore, the conversion feature of the notes, which ties future equity conversion to performance, incentivizes long-term shareholder value creation.

Overall, the issuance aligns with current market trends favoring green financing, helping the company to present itself as a responsible and future-oriented entity in the renewable energy sector.

SAN JOSE, Calif.--(BUSINESS WIRE)-- Bloom Energy Corporation (NYSE:BE) today announced the pricing of its offering of $350.0 million aggregate principal amount of 3.00% green convertible senior notes due 2029 (the “notes”) in a private 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”). The offering size was increased from the previously announced offering size of $250.0 million aggregate principal amount of notes. The issuance and sale of the notes is scheduled to settle on May 29, 2024, subject to customary closing conditions. Bloom Energy also granted the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date the notes are first issued, up to an additional $52.5 million principal amount of notes.

The notes will be senior, unsecured obligations of Bloom Energy and will accrue interest at a rate of 3.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024. The notes will mature on June 1, 2029, unless earlier repurchased, redeemed or converted. Before March 1, 2029, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after March 1, 2029, noteholders may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Bloom Energy will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock or a combination of cash and shares of its Class A common stock, at Bloom Energy’s election. The initial conversion rate is 47.9795 shares of Class A common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $20.84 per share of Class A common stock. The initial conversion price represents a premium of approximately 32.5% over the last reported sale price of $15.73 per share of Bloom Energy’s Class A common stock on May 23, 2024. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. If a “make-whole fundamental change” (as defined in the indenture for the notes) occurs, Bloom Energy will, in certain circumstances, increase the conversion rate for a specified time for holders who convert their notes in connection with that make-whole fundamental change.

The notes will be redeemable, in whole or in part (subject to certain limitations on partial redemptions), for cash at Bloom Energy’s option at any time, and from time to time, on or after June 7, 2027 and on or before the 21st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Bloom Energy’s Class A common stock exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If Bloom Energy calls any or all notes for redemption, holders of notes called for redemption may convert their notes during the related redemption conversion period, and any such conversion will also constitute a “make-whole fundamental change” with respect to the notes so converted.

If a “fundamental change” (as defined in the indenture for the notes) occurs, then, subject to a limited exception, noteholders may require Bloom Energy to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

Bloom Energy estimates that the net proceeds from the offering of the notes will be approximately $338.8 million (or approximately $389.7 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. Bloom Energy intends to use approximately $141.8 million of the net proceeds from the offering of the notes to repurchase $115.0 million aggregate principal amount of its outstanding 2.50% Green Convertible Senior Notes due 2025 (the “existing 2025 convertible notes”) in privately negotiated transactions concurrently with the pricing of the offering. Bloom Energy intends to use the remainder of the net proceeds from the offering of the notes for general corporate purposes, including research and development and sales and marketing activities, general and administrative matters and capital expenditures, all related to projects that meet the “Eligibility Criteria” referred to below. Bloom Energy intends to allocate an amount equal to the net proceeds from the sale of the notes to refinance or finance, in whole or in part, new or on-going projects that meet the “Eligibility Criteria” as defined in the offering disclosure relating to the offering of the notes.

Holders of the existing 2025 convertible notes that are repurchased in the concurrent repurchases described above may purchase shares of Bloom Energy’s Class A common stock in the open market to unwind any hedge positions they may have with respect to the existing 2025 convertible notes. These activities may affect the trading price of Bloom Energy’s Class A common stock and the initial conversion price of the notes.

The offer and sale of the notes and any shares of Class A common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of Class A common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. This press release does not constitute an offer to purchase or notice of redemption with respect to the existing 2025 convertible notes, and Bloom Energy reserves the right to elect not to proceed with the repurchase.

Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the completion of the offering, the expected amount and intended use of the net proceeds and the repurchase transactions described above. Forward-looking statements represent Bloom Energy’s current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Bloom Energy’s business, including those described in periodic reports that Bloom Energy files from time to time with the Securities Exchange Commission. Bloom Energy may not consummate the offering described in this press release and, if the offering is consummated, cannot provide any assurances regarding its ability to effectively apply the net proceeds as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and Bloom Energy does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240523935058/en/

Bloom Media Contact

press@bloomenergy.com

Bloom Investor Contact

Ed Vallejo

Edward.vallejo@bloomenergy.com

Source: Bloom Energy

FAQ

What is the interest rate for Bloom Energy's green convertible senior notes?

The interest rate for Bloom Energy's green convertible senior notes is 3.00% per annum.

When will the Bloom Energy green convertible senior notes mature?

The Bloom Energy green convertible senior notes will mature on June 1, 2029.

What is the initial conversion price of Bloom Energy's green convertible senior notes?

The initial conversion price of Bloom Energy's green convertible senior notes is approximately $20.84 per share.

How much did Bloom Energy's green convertible senior notes offering increase from the initial amount?

Bloom Energy's green convertible senior notes offering increased from $250 million to $350 million.

What are Bloom Energy's plans for the net proceeds from the notes offering?

Bloom Energy plans to use the net proceeds for repurchasing 2025 notes and for general corporate purposes, including R&D, sales, marketing, and capital expenditures.

When is the settlement date for Bloom Energy's green convertible senior notes?

The settlement date for Bloom Energy's green convertible senior notes is scheduled for May 29, 2024.

Can the green convertible senior notes be converted into Bloom Energy’s Class A common stock?

Yes, the notes can be converted into Bloom Energy’s Class A common stock under certain conditions.

What conditions allow for the redemption of Bloom Energy’s green convertible senior notes?

The notes are redeemable if the last reported sale price per share exceeds 130% of the conversion price for a specified period, among other conditions.