Array Technologies Inc. (NASDAQ:ARRY) saw its stock decline by 12% on Thursday after the company revealed plans to issue $250 million worth of convertible senior notes due in 2031 through a private placement aimed at qualified institutional investors.
The solar tracking systems provider explained that these notes will be senior unsecured debt with interest paid twice a year. Upon conversion, Array intends to settle payments primarily in cash up to the total principal amount, with any remaining amount payable in cash, common stock, or a combination, at the company’s discretion.
Proceeds from the offering will be directed toward repaying $150 million of existing term loans and funding capped call transactions designed to mitigate dilution of common shares resulting from note conversions. The remaining funds will support general corporate activities, potentially including additional debt repayments or repurchasing outstanding debt.
Array also intends to offer initial buyers the option to purchase an additional $37.5 million in notes. Details such as the interest rate and conversion rate will be finalized at the time the offering is priced.
In conjunction with this offering, Array plans to enter into privately negotiated capped call agreements with the initial purchasers or their affiliates, which are intended to limit dilution by covering the shares initially underlying the notes, subject to a cap.
Additionally, the company may use some of the proceeds to buy back part of its outstanding 1.00% Convertible Senior Notes due 2028, though no specific commitments have been made regarding the amount or terms of these potential repurchases.