Shares of Liberty Energy Inc. (NYSE:LBRT) dropped about 5.75% on Wednesday after the company revealed plans to issue $450 million in convertible senior notes.
The oilfield services provider said the notes, which will mature in 2032, will be offered through a private placement to qualified institutional buyers. Liberty also expects to give the initial purchasers the option to acquire up to an additional $50 million in notes within 13 days of the initial issuance.
The convertible notes will represent unsecured senior obligations and are scheduled to mature on March 1, 2032, unless they are converted, redeemed, or repurchased earlier. Interest on the notes will be paid twice a year, on March 1 and September 1, beginning on September 1, 2026.
According to the company, a portion of the proceeds will be used to fund capped call transactions, while the remaining funds will be directed toward general corporate purposes. These capped call transactions are intended to help limit potential dilution of Class A common stock if the notes are converted.
Before December 1, 2031, noteholders will be able to convert their holdings only if certain conditions are met. After that date, conversions may occur at any time until the second scheduled trading day before the notes reach maturity. When conversions occur, Liberty will settle the principal amount in cash and may choose to deliver additional value in cash, shares, or a mix of both.
The company also noted that it may redeem the notes for cash starting March 1, 2029, provided its Class A common stock trades at least 130% of the conversion price for a minimum of 20 trading days within any 30-day trading period.
Liberty added that, as part of the hedging strategy for the capped call transactions, counterparties may purchase shares of its Class A common stock in the secondary market, which could influence movements in the stock price.