Company entered into capped call
transactions to increase effective conversion premium to
100%
Company repurchased approximately 12.3
million shares of common stock using approximately $191.6 million
of net proceeds, representing 6.9% of common shares outstanding
prior to the transaction
Company repurchased $400.0 million of
existing 2026 convertible notes using approximately $358.4 million
of net proceeds
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”)
today announced the pricing of an offering of $650 million
principal amount of its 3.00% Convertible Senior Notes due 2030
(the “notes”) through 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”). MP Materials has also granted the initial purchasers an
option to purchase, for settlement within a 13-day period beginning
on, and including, the date MP Materials first issues the notes, up
to an additional $97.5 million principal amount of notes. The
offering was upsized from the previously announced offering of $500
million principal amount. The offering is expected to close on
March 7, 2024, subject to customary closing conditions.
The notes will be senior unsecured obligations of MP Materials,
and interest will be payable semi-annually in arrears on March 1
and September 1 of each year, beginning on September 1, 2024. The
notes will mature on March 1, 2030, unless earlier converted,
redeemed or repurchased. MP Materials may redeem for cash all or
any portion of the notes (subject to a partial redemption
limitation), at MP Materials’ option, on or after March 5, 2027 and
prior to the 41st scheduled trading day immediately preceding the
maturity date, if (i) certain liquidity conditions are met and (ii)
the last reported sale price of MP Materials’ common stock (the
“common stock”) has been at least 130% of the conversion price then
in effect for at least 20 trading days (whether or not
consecutive), including the trading day immediately preceding the
date on which MP Materials provides notice of redemption, during
any 30 consecutive trading day period ending on, and including, the
trading day immediately preceding the date on which MP Materials
provides the related notice of redemption at a redemption price
equal to 100% of the principal amount of the notes to be redeemed,
plus accrued and unpaid interest.
The notes will be convertible into cash, shares of common stock
or a combination of cash and shares of common stock at MP
Materials’ election at an initial conversion rate of 45.9939 shares
of common stock per $1,000 principal amount of the notes, which is
equivalent to an initial conversion price of approximately $21.74
per share. The initial conversion price of the notes represents a
premium of approximately 40% over the last reported sale price of
$15.53 per share of the common stock on March 4, 2024. The
conversion rate and conversion price will be subject to adjustment
upon the occurrence of certain events.
Prior to the close of business on the business day immediately
preceding December 1, 2029, the notes will be convertible at the
option of the holders only upon the satisfaction of certain
conditions and during certain periods. Thereafter, until the close
of business on the second scheduled trading day immediately
preceding the maturity date, the notes will be convertible at the
option of the holders at any time. If MP Materials undergoes a
fundamental change (as defined in the indenture governing the
notes), holders may require MP Materials to purchase for cash all
or any portion of their notes at a fundamental change repurchase
price equal to 100% of the principal amount of the notes to be
purchased, plus accrued and unpaid interest, if any, up to, but
excluding, the fundamental change repurchase date. In addition, if
certain corporate events occur or if MP Materials delivers a notice
of redemption, MP Materials will, in certain circumstances,
increase the conversion rate for any notes converted in connection
with such corporate event or notice of redemption.
MP Materials estimates that the net proceeds from the offering
will be approximately $632.8 million (or approximately $727.8
million if the initial purchasers exercise in full their option to
purchase additional notes), after deducting initial purchasers’
discounts and estimated offering expenses. MP Materials intends to
use the net proceeds from the offering (i) to fund the approximate
$56.8 million cost of entering into the capped call transactions
described below, (ii) to repurchase approximately 12.3 million
shares of common stock, using approximately $191.6 million of the
net proceeds from the offering as described below, (iii) to
repurchase approximately $400.0 million in aggregate principal
amount of its 0.25% green convertible senior notes due 2026 (the
“2026 notes”) using approximately $358.4 million of the net
proceeds from the offering as described below, and (iv) for general
corporate purposes.
In connection with the pricing of the notes, MP Materials has
entered into privately negotiated capped call transactions with one
or more of the initial purchasers of the notes or their respective
affiliates and certain financial institutions (the “capped call
counterparties”). The capped call transactions cover, subject to
anti-dilution adjustments substantially similar to those applicable
to the notes, the number of shares of common stock that initially
underlie the notes, assuming the initial purchasers do not exercise
their option to purchase additional notes. The cap price of the
capped call transactions is initially $31.06 per share of common
stock, representing a premium of 100% above the last reported sale
price of $15.53 per share of common stock on March 4, 2024, and is
subject to certain adjustments under the terms of the capped call
transactions. The capped call transactions are expected generally
to reduce potential dilution to the common stock upon conversion of
the notes and/or offset any cash payments that MP Materials could
be required to make in excess of the principal amount of any
converted notes upon conversion thereof, as the case may be, with
such reduction and/or offset subject to a cap. If the initial
purchasers exercise their option to purchase additional notes, MP
Materials expects to enter into additional capped call transactions
with the capped call counterparties.
In connection with establishing their initial hedges of the
capped call transactions, the capped call counterparties have
advised MP Materials that they or their respective affiliates
expect to enter into various derivative transactions with respect
to the common stock concurrently with, or shortly after, the
pricing of the notes, and may unwind these various derivative
transactions and purchase common stock in open market transactions
shortly after the pricing of the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of the common stock or the notes at that time.
In addition, the capped call counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the common stock
and/or purchasing or selling the common stock or other of MP
Materials’ securities in secondary market transactions following
the pricing of the notes and prior to the maturity of the notes
(and are likely to do so during any observation period related to a
conversion of a note). This activity could also cause or avoid an
increase or a decrease in the market price of the common stock or
the notes, which could affect noteholders’ ability to convert the
notes and, to the extent the activity occurs during any observation
period related to a conversion of the notes, it could affect the
number of shares and value of the consideration that noteholders
will receive upon conversion of the notes.
Concurrently with the pricing of the notes, the Company entered
into one or more separate and individually negotiated transactions
with certain holders of the 2026 notes to repurchase for cash a
portion of the 2026 notes on terms negotiated with each such holder
(the “note repurchases”). The Company expects that holders of the
2026 notes that sell their 2026 notes to the Company in any note
repurchase transaction may enter into or unwind various derivatives
with respect to the common stock and/or purchase or sell shares of
the common stock in the market to hedge their exposure in
connection with these transactions. In particular, the Company
expects that many holders of the 2026 notes employ a convertible
arbitrage strategy with respect to the 2026 notes and have a short
position with respect to the common stock that they would close,
through purchases of the common stock and/or the entry into or
unwind of economically equivalent derivatives transactions with
respect to the common stock, in connection with the Company’s
repurchase of its 2026 notes for cash. This activity could increase
(or reduce the size of any decrease in) the market price of the
common stock or the notes at that time and could result in a higher
effective conversion price for the notes.
Concurrently with the pricing of the notes and the note
repurchases, the Company agreed to repurchase approximately 12.3
million shares of common stock from purchasers of notes in
privately negotiated transactions effected with or through one of
the initial purchasers or its affiliate, pursuant to a newly
adopted share repurchase program, at a purchase price per share
equal to $15.53, the last reported sale price per share of common
stock on the date of the pricing of the offering. These repurchases
could increase (or reduce the size of any decrease in) the market
price of the common stock prior to or concurrently with the pricing
of the notes and could result in a higher effective conversion
price for the notes.
The notes and the shares of common stock issuable upon
conversion of the notes have not been, and will not be, registered
under the Securities Act, or under any state securities laws, and
may not be offered or sold in the United States without
registration under, or an applicable exemption from, the
registration requirements. This press release is not an offer to
sell, nor is it a solicitation of an offer to buy, these
securities, nor shall there be any sale of these securities in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any state or any jurisdiction. It is issued
pursuant to Rule 135c under the Securities Act.
About MP Materials
MP Materials (NYSE: MP) produces specialty materials that are
vital inputs for electrification and other advanced technologies.
MP’s Mountain Pass facility is America’s only scaled rare earth
production source. The Company is currently expanding its
manufacturing operations downstream to provide a full supply chain
solution from materials to magnetics.
Join the MP Materials community on X, YouTube, and LinkedIn.
Forward-Looking Statements
Certain statements included in this press release that are not
historical facts are forward-looking statements under Section 27A
of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements may be identified by the use of the words such as
“estimate,” “plan,” “shall,” “may,” “project,” “forecast,”
“intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” or
similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. These
forward-looking statements include, but are not limited to,
expectations regarding the proposed notes offering and the use of
proceeds therefrom. These statements are based on various
assumptions, whether or not identified in this press release, and
on the current expectations of our management and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the control of MP
Materials. These forward-looking statements are subject to a number
of risks and uncertainties, including, without limitation, those
discussed in MP Materials’ Annual Report on Form 10-K filed on
February 28, 2024 under the heading “Risk Factors” and other
documents filed by MP Materials with the SEC. If any of these risks
materialize or our assumptions prove incorrect, actual results
could differ materially from the results implied by these
forward-looking statements. There may be additional risks that MP
Materials does not presently know or that MP Materials currently
believes are immaterial that could also cause actual results to
differ from those contained in the forward-looking statements. In
addition, forward-looking statements reflect MP Materials’
expectations, plans or forecasts of future events and views as of
the date of this press release. MP Materials anticipates that
subsequent events and developments will cause MP Materials’
assessments to change. However, while MP Materials may elect to
update these forward-looking statements at some point in the
future, MP Materials specifically disclaims any obligation to do
so, unless required by applicable law. These forward-looking
statements should not be relied upon as representing MP Materials’
assessments as of any date subsequent to the date of this press
release. Accordingly, undue reliance should not be placed upon the
forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20240304480888/en/
Investors: Martin Sheehan IR@mpmaterials.com
Media: Matt Sloustcher media@mpmaterials.com
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