Sunrun Inc. Announces Proposed Private Offering of $475 Million of Convertible Senior Notes
22 February 2024 - 8:26AM
Sunrun Inc. (Nasdaq: RUN) (“Sunrun”) today announced that it
intends to offer, subject to market conditions and other
factors, $475 million aggregate principal amount of
convertible senior notes due 2030 (the “notes”) in a private
placement to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”). Sunrun also intends to
grant the initial purchasers of the notes the option to purchase up
to an additional $75 million aggregate principal amount of the
notes within a 13-day period beginning on, and including, the date
on which the notes are first issued.
The notes will be senior, unsecured obligations
of Sunrun and will accrue interest payable semiannually 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. The notes will be convertible
into cash, shares of Sunrun’s common stock or a combination of cash
and shares of Sunrun’s common stock, at Sunrun’s election. The
interest rate, initial conversion rate and other terms of the notes
will be determined at the time of pricing of the offering.
Sunrun intends to use (i) a portion of the net
proceeds from the offering to repurchase a portion of its 0%
Convertible Senior Notes due 2026 (the “2026 notes”) concurrently
with the pricing of the offering in privately negotiated
transactions effected with or through one of the initial purchasers
of the notes or its affiliate, (ii) a portion of the net proceeds
from the offering to pay the cost of the capped call transactions
described below, and (iii) the remainder of the net proceeds from
the offering to repay outstanding debt and for other general
corporate purposes, which may include working capital, capital
expenditures, and potential acquisitions and future transactions.
However, it has not designated any specific uses and has no
definitive agreements with respect to any material acquisition or
strategic transaction.
Holders of the 2026 notes that are repurchased
in the concurrent repurchases described above may purchase shares
of Sunrun’s common stock in the open market to unwind any hedge
positions they may have with respect to the 2026 notes. These
activities may increase (or reduce the size of any decrease in) the
trading price of Sunrun’s common stock and, if conducted
concurrently with the offering, may result in a higher initial
conversion price for the notes Sunrun is offering.
In connection with the pricing of the notes,
Sunrun expects to enter into capped call transactions (the “capped
call transactions”) with one or more of the initial purchasers
and/or their respective affiliates and/or other financial
institutions (the “option counterparties”). The capped call
transactions are expected generally to reduce the potential
dilution to Sunrun’s common stock upon any conversion of notes
and/or offset any cash payments Sunrun is required to make in
excess of the principal amount of converted notes, 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, Sunrun expects to enter into additional capped call
transactions with the option counterparties.
In connection with establishing their initial
hedges of the capped call transactions, the option counterparties
or their respective affiliates expect to purchase shares of
Sunrun’s common stock and/or enter into various derivative
transactions with respect to Sunrun’s common stock concurrently
with or shortly after the pricing of the notes. These activities
could increase (or reduce the size of any decrease in) the market
price of Sunrun’s common stock or the notes at that time.
In addition, the option counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to Sunrun’s
common stock and/or purchasing or selling Sunrun’s common stock or
other securities of Sunrun 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 the observation period for
conversions of notes following December 1, 2029 and, to the extent
that Sunrun unwinds a corresponding portion of the capped call
transactions, following an early conversion of notes or repurchase
or redemption of the notes). This activity could also cause or
avoid an increase or a decrease in the market price of Sunrun’s
common stock or the notes, which could affect the ability of
noteholders to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of
notes, it could affect the number of shares and value of the
consideration that a noteholder will receive upon conversion of its
notes.
Neither the notes, nor any shares of Sunrun’s
common stock issuable upon conversion of the notes, have been, nor
will be, registered under the Securities Act or any state
securities laws and, unless so registered, such securities may not
be offered or sold in the United States absent
registration or an applicable exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and other applicable securities laws.
This press release is neither an offer to sell
nor a solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
Contacts
Investor & Analyst Contact:
Patrick JobinSenior Vice President, Finance & Investor
Relationsinvestors@sunrun.com
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