In a move to restructure its debt, Plug Power Inc. (NASDAQ:PLUG) has entered into agreements to exchange a portion of its convertible senior notes. The company announced on Monday that it has reached exchange agreements with certain holders of its 3.75% Convertible Senior Notes due in 2025. These notes will be swapped for new 7.00% Convertible Senior Notes due in 2026, with the transaction involving $138.8 million in principal amount of the old notes.
The exchange is set to take place on or about March 20, 2024, subject to the usual closing conditions. After the exchange, approximately $58.5 million of the original notes will remain outstanding. The new notes will be senior, unsecured obligations of Plug Power, bearing a higher interest rate of 7.00% per annum, payable semi-annually, with the first payment due on June 1, 2024.
The new notes will mature on June 1, 2026, unless they are converted, redeemed, or repurchased before that date. The initial conversion rate is set at 235.4049 shares of Plug Power’s common stock per $1,000 principal amount of the new notes, which translates to an initial conversion price of about $4.25 per share. This represents a 20% premium over the last reported sale price of the company's stock on the transaction announcement date.
Holders of the new notes will have the option to convert their notes under certain conditions and during specified periods before December 1, 2025. After this date and until the maturity date, conversions can be made at any time. The company has the discretion to settle conversions in cash, shares of its common stock, or a combination of both.
In the event of a "Fundamental Change," as defined in the agreement, note holders may require Plug Power to repurchase their notes at the principal amount plus accrued interest. Additionally, starting June 5, 2025, the company can redeem the new notes, in whole or in part, at a redemption price equal to the principal amount plus accrued interest, but only if its stock price exceeds 130% of the conversion price for a specified period.
This financial restructuring is detailed in a Form 8-K filed with the SEC.
InvestingPro Insights
Amidst Plug Power Inc.'s (NASDAQ:PLUG) efforts to restructure its debt through the exchange of convertible senior notes, the company's financial health and market performance are critical for investors. According to InvestingPro data, the company's market cap stands at approximately $2.34 billion USD, reflecting its current valuation in the market. Despite a notable revenue growth of 27.07% over the last twelve months as of Q4 2023, the company's gross profit margin has been negative, at -47.28%, indicating challenges in maintaining profitability.
Investors should note that the company's stock price has experienced significant volatility, with a 1-year price total return of -71.45% as of the most recent data. This volatility is further underscored by the InvestingPro Tips, which highlight that the stock has taken a considerable hit over the last week, month, and six months. Additionally, analysts have revised their earnings downwards for the upcoming period, and the company is not expected to be profitable this year.
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