TLDR
- Plug Power priced $375 million in 6.75% convertible senior notes with a 2033 maturity date
- Proceeds will eliminate $245.6 million in 15% secured debentures and buy back $138 million of 7% notes
- The conversion price of $3.00 per share sits 40% above the $2.14 closing price from November 18
- Shares fell 21% as market participants calculated potential dilution of approximately 125 million shares
- Transaction closes November 21 and reduces interest expenses while extending maturity timeline
Plug Power closed pricing on $375 million in convertible senior notes, triggering a 21% decline in the stock price. The offering went to qualified institutional buyers at 95% of principal value.
The notes mature on December 1, 2033 and carry a 6.75% interest rate. Initial purchasers hold a 13-day option for another $56.25 million in notes.
After deducting discounts and estimated expenses, Plug Power expects net proceeds around $347.2 million. If purchasers exercise their full option, proceeds climb to roughly $399.4 million.
Management outlined how it plans to deploy the capital. The company will allocate $245.6 million to fully retire its 15% secured debentures, including accrued interest and termination fees. The remaining $101.6 million in proceeds, combined with $52.4 million from existing cash reserves, will fund the repurchase of approximately $138 million in 7% convertible notes maturing in 2026.
Share Conversion Mechanics Worry Investors
Each $1,000 in principal converts to 333.3333 shares of common stock. That establishes a conversion price around $3.00 per share.
The conversion price stands 40% higher than where shares closed on November 18 at $2.14. Converting the entire $375 million offering would add about 125 million shares to the float.
Market participants sold off the stock over concerns about ownership dilution. The potential share increase would represent roughly 33% of current outstanding shares.
Plug Power faces restrictions on calling the notes early. No redemption can occur before December 6, 2028.
After that date, the company gains redemption rights if shares trade at or above 130% of the conversion price for 20 days within any 30-day stretch. Redemption price equals 100% of principal plus unpaid interest.
Note Structure and Investor Protections
The notes represent unsecured senior obligations. They rank equally with other unsecured debt but behind any secured borrowings.
Interest gets paid twice yearly on June 1 and December 1, with the first payment on June 1, 2026. On December 6, 2029, noteholders can demand repurchase at par plus accrued interest.
Fundamental change events also give holders the right to require repurchase at 100% of principal plus interest.
The offering is scheduled to close on or around November 21, 2025, subject to customary conditions.
The company currently holds a $2.9 billion market capitalization. Shares have declined 8.15% year-to-date. Daily trading volume averages 118.8 million shares.
The 5% discount on the offering generates gross proceeds of $356.25 million before fees. This pricing aligns with standard market terms for private convertible placements.
The refinancing strategy cuts borrowing costs substantially. Replacing 15% debt with 6.75% notes reduces annual interest payments. Pushing out maturities from 2026 to 2033 improves near-term liquidity.
However, the notes rank as unsecured obligations. They sit behind secured creditors and subsidiary debt in the capital structure. The conversion feature creates potential share count expansion that could pressure earnings metrics.
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