SAN FRANCISCO - Sunrun Inc . (NASDAQ:RUN), a leading solar company, has announced the pricing of $475 million in 4.00% convertible senior notes due in 2030. The private placement is aimed at qualified institutional buyers, with an additional option for purchasers to acquire up to $75 million more within a 13-day period starting from the issue date. The notes, priced at 99.75% of the aggregate principal amount, are set to be senior, unsecured obligations of Sunrun, with interest payable semi-annually starting September 1, 2024.
The sale is expected to close on February 27, 2024, subject to standard closing conditions. The notes will mature on March 1, 2030, unless converted, redeemed, or repurchased before that date. The initial conversion rate is set at approximately 61.37 shares of Sunrun's common stock per $1,000 principal amount of notes, which equates to an initial conversion price of roughly $16.29 per share. This price represents a 27.5% premium over Sunrun’s common stock's last reported sale price of $12.78 on February 22, 2024.
Sunrun has specified that it will not redeem the notes before March 5, 2027. However, after this date, the company may choose to redeem the notes if the stock's sale price exceeds a certain threshold. In the event of a "fundamental change," note holders may require Sunrun to repurchase their notes.
The net proceeds from the offering are estimated to be approximately $462.8 million or $536.0 million if the additional notes are fully purchased. Sunrun plans to use part of the proceeds to repurchase a portion of its 0% Convertible Senior Notes due in 2026 and to pay for capped call transactions, which are intended to reduce potential dilution upon conversion of the new notes. The remaining proceeds are earmarked for repaying debt and other general corporate purposes, including potential acquisitions, although no specific plans have been disclosed.
The announcement also details that Sunrun has entered into capped call transactions with some of the initial purchasers or their affiliates. These transactions are expected to offset potential dilution and cash payments upon conversion of the notes, subject to a cap. The capped call transactions may affect the market price of Sunrun's common stock due to anticipated purchasing of shares and derivative transactions by the counterparties.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities. The notes and any shares of common stock issuable upon their conversion have not been registered under the Securities Act or any state securities laws and will not be offered or sold in the United States without registration or an exemption from registration requirements. This article is based on a press release statement from Sunrun Inc.
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