Enphase Energy, Inc. (Nasdaq: ENPH) today
announced the pricing of $575 million aggregate principal amount of
green 0.0% Convertible Senior Notes due 2026 (the “2026 notes”) and
$575 million aggregate principal amount of green 0.0% Convertible
Senior Notes due 2028 (the “2028 notes” and together with the 2026
notes, the “notes”) in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”). The offering was
upsized from the previously announced offering of $500 million
aggregate principal amount of 2026 notes and $500 million aggregate
principal amount of 2028 notes. Enphase also granted the initial
purchasers of the notes a 13-day option to purchase up to an
additional $57.5 million aggregate principal amount of 2026 notes
and an additional $57.5 million aggregate principal amount of 2028
notes to cover over-allotments, if any. The sale of the notes to
the initial purchasers is expected to settle on March 1, 2021,
subject to customary closing conditions, and Enphase expects to
receive approximately $1.132 billion in net proceeds (or
approximately $1.245 billion if the initial purchasers exercise
their over-allotment option in full in respect of both series of
notes), after deducting the initial purchasers’ discount and
estimated offering expenses payable by Enphase.
The Notes:
The notes will not bear regular interest, and
the principal amount of the notes will not accrete. The 2026 notes
will mature on March 1, 2026, unless earlier converted, redeemed or
repurchased in accordance with their terms. The 2028 notes will
mature on March 1, 2028, unless earlier converted, redeemed or
repurchased in accordance with their terms. The notes will be
senior, unsecured obligations of Enphase.
Enphase may redeem for cash all or any portion
of the 2026 notes, at its option, on or after September 6, 2023,
and Enphase may redeem for cash all or any portion of the 2028
notes, at its option, on or after September 6, 2024, in each case,
if the last reported sale price of Enphase common stock has been at
least 130% of the relevant conversion price then in effect for the
2026 notes or the 2028 notes, as applicable, for at least 20
trading days (whether or not consecutive), including the trading
day immediately preceding the date on which Enphase provides notice
of redemption in respect of the 2026 notes or the 2028 notes, as
applicable, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which Enphase provides such notice of redemption at a redemption
price equal to 100% of the principal amount of the 2026 notes or
2028 notes, as applicable, to be redeemed, plus accrued and unpaid
special interest, if any, to, but excluding, the relevant
redemption date.
The initial conversion rate for the 2026 notes
is 3.2523 shares of Enphase common stock per $1,000 principal
amount of the 2026 notes (which is equivalent to an initial
conversion price of approximately $307.47 per share of Enphase
common stock). The initial conversion price for the 2026 notes
represents a premium of approximately 70.0% above the $180.87 per
share closing price of Enphase common stock on February 24, 2021.
The initial conversion rate for the 2028 notes is 3.5104 shares of
Enphase common stock per $1,000 principal amount of the 2028 notes
(which is equivalent to an initial conversion price of
approximately $284.87 per share of Enphase common stock). The
initial conversion price for the 2028 notes represents a premium of
approximately 57.50% above the $180.87 per share closing price of
Enphase common stock on February 24, 2021.
Prior to the close of business on the business
day immediately preceding September 1, 2025, the 2026 notes will be
convertible at the option of the holders thereof only under certain
circumstances and during certain periods as set forth in the
indenture for the 2026 notes. Prior to the close of business on the
business day immediately preceding September 1, 2027, the 2028
notes will be convertible at the option of the holders thereof only
under certain circumstances and during certain periods as set forth
in the indenture for the 2028 notes. On or after September 1, 2025,
in the case of the 2026 notes, or on or after September 1, 2027, in
the case of the 2028 notes, until the close of business on the
second scheduled trading day immediately preceding the relevant
maturity date, the holders of the relevant series of 2026 notes or
2028 notes may convert all or a portion of their notes at any time
regardless of such circumstances. Enphase will settle conversions
of the notes in cash, shares of its common stock or a combination
of cash and its common stock, at its election.
Convertible Note Hedge and Warrant
Transactions:
In connection with the pricing of the notes,
Enphase entered into convertible note hedge transactions relating
to each series of notes with certain of the initial purchasers of
the notes and/or their respective affiliates and other financial
institutions (the “counterparties”). The convertible note hedge
transactions are expected generally to reduce or offset the
potential dilution to Enphase common stock upon any conversion of
the relevant notes and/or offset any cash payments Enphase is
required to make in excess of the principal amount of the notes, as
the case may be.
Enphase also entered into warrant transactions
relating to each series of notes with the counterparties. The
warrant transactions could separately have a dilutive effect to the
extent that the market value per share of Enphase common stock
exceeds the strike price of the warrants. The strike price of the
warrant transactions will initially be approximately $397.91 per
share, which represents a premium of approximately 120% over the
last reported sale price of Enphase common stock of $180.87 per
share on February 24, 2021 and is subject to certain adjustments
under the terms of the warrant transactions.
If the initial purchasers exercise their
over-allotment option, Enphase expects to enter into additional
convertible note hedge transactions and additional warrant
transactions with the counterparties with respect to the relevant
series of notes as to which the option is exercised.
Enphase expects that, in connection with
establishing their initial hedge of the convertible note hedge
transactions and warrant transactions, the counterparties or their
respective affiliates will enter into various derivative
transactions with respect to Enphase common stock concurrently
with, or shortly after, the pricing of the notes. This activity
could also cause or prevent an increase or a decrease in the market
price of Enphase common stock or the notes at that time. In
addition, Enphase expects that the counterparties may modify their
hedge positions by entering into or unwinding various derivatives
with respect to Enphase common stock and/or purchasing or selling
shares of common stock or its other securities in secondary market
transactions following the pricing of the notes and prior to the
maturity of each series of the notes (and are likely to do so
during any observation period related to a conversion of the
notes). This activity could also cause or prevent an increase or a
decrease in the market price of Enphase common stock or 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.
Repurchases of Outstanding 2024 Notes and 2025
Notes:
Concurrently with the offering of the notes,
Enphase entered into separately- and privately-negotiated
transactions with certain holders of its 1.0% Convertible Senior
Notes due 2024 (the “2024 notes”) to repurchase $25,546,000
aggregate principal amount of the outstanding 2024 notes for a
total repurchase cost of $25,546,000 in cash and 1,105,199 shares
of its common stock and with certain holders of its 0.25%
Convertible Senior Notes due 2025 (the “2025 notes”) to repurchase
$217,740,000 aggregate principal amount of the outstanding 2025
notes for $217,740,000 in cash and 1,673,532 shares of its common
stock (collectively, the “Note Repurchase Transactions”).
The terms of each separate Note Repurchase
Transaction have been individually negotiated with each holder of
2024 notes or 2025 notes being repurchased, and the Note Repurchase
Transactions are subject to factors including the market price of
Enphase common stock and the trading prices of Enphase 2024 notes
and 2025 notes at the time of each Note Repurchase Transaction. The
issuance of the shares of Enphase common stock in connection with
each Note Repurchase Transaction will be made pursuant to Section
4(a)(2) of the Securities Act.
The repurchase of the outstanding 2024 notes and
2025 notes could affect the market price of its common stock and
the initial conversion prices of the 2026 notes and the 2028 notes.
Enphase also expects that holders of its 2024 notes and 2025 notes
that sell their 2024 notes or 2025 notes in any Note Repurchase
Transaction may purchase or sell shares of its common stock in the
market to hedge their exposure in connection with these
transactions. This activity could affect the market price of
Enphase common stock and could also impact the initial conversion
prices of the 2026 notes and the 2028 notes.
Unwind of Existing Convertible Note Hedge and
Warrant Transactions:
In connection with the Note Repurchase
Transactions, Enphase entered into partial unwind agreements (the
“Unwind Agreements”) with certain existing convertible note hedge
and warrant counterparties (the “existing hedge counterparties”)
to, concurrently with this offering, unwind a portion of the
existing convertible note hedge and warrant transactions Enphase
entered into concurrently with the issuances of the 2024 notes and
the 2025 notes (collectively, the “Unwind Transactions”). In
connection with the Unwind Transactions and pursuant to the Unwind
Agreements, Enphase will receive either cash or shares of its
common stock as a termination payment in respect of the portion of
the existing convertible note hedge transactions that are unwound
and Enphase will issue shares of its common stock as a termination
payment in respect of the portion of the existing warrant
transactions that are unwound. The amount of cash that Enphase
receives and/or the number of shares that Enphase receives or
issues in connection with the Unwind Transactions are based
generally on the termination value of the unwound portions of such
transactions. Enphase may also unwind the remaining existing
convertible note hedge and warrant transactions with respect to the
2024 notes and the 2025 notes at any time immediately following
completion of the offering of the notes. In connection with the
Unwind Transactions, the existing hedge counterparties may enter
into or unwind various derivatives with respect to Enphase common
stock and/or purchase or sell shares of common stock or Enphase
other securities in secondary market transactions. This activity
could affect the market price of Enphase common stock and could
impact the initial conversion prices of each series of notes.
Use of Proceeds:
Enphase expects to use approximately $63.0
million of the net proceeds from the offering of the notes to pay
the cost of the convertible note hedge transactions described above
(after such cost is partially offset by the proceeds to Enphase
from the sale of the warrants described above). If the initial
purchasers exercise their over-allotment option in respect of a
series of notes, Enphase expects to enter into additional
convertible note hedge transactions and warrant transactions
relating to such additional notes, and a portion of the net
proceeds from the sale of the additional notes of such series would
be used to pay the costs of the additional convertible note hedge
transactions relating to such additional notes (which would be
partially offset by the proceeds to Enphase from the sale of
additional warrants relating to such additional notes).
Enphase also expects to use approximately $243.3
million of the net proceeds from the offering of the notes for the
cash amounts payable in connection with the separately- and
privately-negotiated Note Repurchase Transactions described
above.
Enphase intends to use any remaining net
proceeds from the sale of the notes for other working capital and
other general corporate purposes. In addition, an amount equal to
the net proceeds is expected to finance or refinance, in whole or
in part, existing, new or ongoing eligible green expenditures.
This press release is neither an offer to sell
nor a solicitation of an offer to buy the notes or the shares of
Enphase common stock issuable upon conversion of the notes, nor
will 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 the registration or qualification under the
securities laws of any such state or jurisdiction.
The notes and the shares of Enphase common stock
issuable upon conversion of the notes have not been and will not be
registered under the Securities Act, or the securities laws of any
other jurisdiction, and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements. The offering of the notes is being made
to persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
About Enphase Energy, Inc.
Enphase is a global energy technology company and delivers
smart, easy-to-use solutions that manage solar generation, storage
and management on a single platform.
Forward-Looking Statements
This announcement contains certain forward-looking statements
based on Enphase’s current expectations as to the outcome and
timing of future events. All statements, other than statements of
historical facts, including all statements regarding the offering
of the notes, the completion of the convertible note hedge
transactions and warrant transactions with the counterparties, the
completion of the Note Repurchase Transactions, the completion of
the Unwind Transactions, the completion of the offering of the
notes, the anticipated use of the net proceeds from the offering of
the notes, and that address activities or results that Enphase
plans, expects, believes, projects, estimates or anticipates will,
should or may occur in the future, are forward-looking statements.
Actual events may differ materially from those expressed or implied
by these forward-looking statements, including the possibility that
Enphase does not consummate the offering of the notes; that Enphase
does not complete the convertible note hedge transactions and
warrant transactions with the counterparties; that Enphase does not
complete the Note Repurchase Transactions; changes in the structure
or terms of the Unwind Transactions (or that Enphase does not
complete any Unwind Transactions); changes in the anticipated uses
of the net proceeds from the offering of the notes, which could
change as a result of market conditions or for other reasons
related to Enphase’s business and the impact of general economic,
industry or political conditions in the United States or
internationally. For a discussion of factors affecting Enphase’s
business and prospects, see its annual, quarterly and other reports
filed with the Securities and Exchange Commission. Enphase
undertakes no duty or obligation to update any forward-looking
statements contained in this release as a result of new
information, future events or changes in its expectations, except
as required by law.
Enphase Contact:Adam HinckleyEnphase Energy,
Inc.Investor Relationsir@enphaseenergy.com+1-707-763-4784 x7354
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