Stem, Inc. ("Stem") (NYSE: STEM) announced today the pricing of
$200 million aggregate principal amount of 4.25% Green Convertible
Senior Notes due 2030 (the "Notes") in a private offering (the
"Offering"), which was upsized from the previously announced $175
million 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"). In connection with the
Offering, Stem has granted the initial purchasers of the Notes an
option to purchase, for settlement within a 13-day period from, and
including, the date when the Notes are first issued, up to an
additional $40 million aggregate principal amount of the Notes on
the same terms and conditions. The sale of the Notes to the initial
purchasers is expected to settle on April 3, 2023, subject to
customary closing conditions.
When issued, the Notes will be senior, unsecured obligations of
Stem. The Notes will accrue interest payable semi-annually in
arrears and will mature on April 1, 2030, unless earlier
repurchased, redeemed or converted in accordance with their terms
prior to such date. The Notes will be convertible based on an
initial conversion rate of 140.3066 shares of Stem's common stock
per $1,000 principal amount of Notes (equivalent to an initial
conversion price of approximately $7.13 per share of common stock,
which represents a conversion premium of approximately 27.50% to
the last reported sale price of Stem's common stock on The New York
Stock Exchange (the "NYSE") on March 29, 2023). The Notes will be
convertible upon the satisfaction of specified conditions into
cash, shares of common stock of Stem or a combination thereof, with
the form of consideration to be determined at Stem's election. The
Notes will be redeemable, in whole or in part, for cash at Stem's
option at any time, and from time to time, on or after April 5,
2027 and before the 45th scheduled trading day immediately before
the maturity date, but only if the last reported sale price per
share of Stem's common stock exceeds 130% of the conversion price
for a specified period of time.
In connection with the pricing of the Notes, Stem has entered
into privately negotiated capped call transactions with one or more
of the initial purchasers or their affiliates and/or other
financial institutions (the “option counterparties”). The capped
call transactions are expected generally to reduce potential
dilution to Stem’s common stock upon any conversion of the Notes
and/or offset any potential cash payments Stem 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. The cap
price of the capped call transactions is initially $11.18 per share
of common stock, which represents a premium of 100.0% to the last
reported sale price of Stem’s common stock on the NYSE on March 29,
2023, and is subject to certain adjustments under the terms of the
capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, Stem expects that the option
counterparties or their respective affiliates will purchase shares
of Stem’s common stock and/or enter into various derivative
transactions with respect to Stem’s common stock concurrently with
or shortly after the pricing of the Notes. This activity could
increase (or reduce the size of any decrease in) the market price
of Stem’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 Stem’s common stock
and/or purchasing or selling Stem’s common stock or selling Stem’s
common stock or other 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 following any dates the Notes are
converted, repurchase or redeemed, if Stem exercises its option to
terminate the relevant portion of the capped call transactions).
This activity could also cause or avoid an increase or decrease in
the market price of Stem’s 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 Notes, it could affect the number of shares and value
of the consideration that noteholders receive upon conversion of
the Notes.
Stem intends to use (i) approximately $99.8 million of the net
proceeds from the Offering to purchase and surrender for
cancellation approximately $163.0 million aggregate principal
amount of Stem's 0.50% Green Convertible Senior Notes due 2028 (the
"2028 Notes") in privately negotiated transactions concurrently
with the pricing of the Offering; (ii) approximately $23.2 million
of the net proceeds of the Offering to fund the cost of entering
into the capped call transactions described above; and (iii) the
remainder of the net proceeds of the Offering for general corporate
purposes. If the initial purchasers exercise their option to
purchase additional Notes, then Stem intends to use a portion of
the additional net proceeds to fund the cost of entering into
additional capped call transactions as described above.
Stem intends to allocate an amount of funds equivalent to the
net proceeds of the Offering towards financing or refinancing, in
whole or in part, existing, new or ongoing Eligible Green
Expenditures. "Eligible Green Expenditures" may include investments
related to creating a more resilient clean energy system, optimized
software capabilities for energy systems, and reducing waste
through operations, including research, development, acquisitions,
capital expenditures, and operational expenses in initiatives
aligned with the Eligible Green Expenditures.
Stem expects that some purchasers of the Notes may seek to sell
shares of Stem's common stock and/or enter into various derivative
transactions to establish hedge positions with respect to the
Notes. In addition, holders of the 2028 Notes that are repurchased
in the concurrent repurchases described above may unwind or enter
into various derivative transactions with respect to Stem's common
stock and/or purchase shares of Stem's common stock in the open
market to unwind any hedge positions they may have with respect to
the 2028 Notes.
The Notes were offered only to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The offer and sale of the Notes and any shares of
common stock of Stem issuable upon conversion of the Notes, if any,
have not been, and will not be, registered under the Securities Act
or the securities laws of any other jurisdiction, and unless so
registered, the Notes and such shares, if any, may not be offered
or sold in the United States except pursuant to an applicable
exemption from such registration requirements.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any offer or
sale of, the Notes (or any shares of common stock of Stem issuable
upon conversion of the Notes) in any state or jurisdiction in which
the offer, solicitation, or sale would be unlawful prior to the
registration or qualification thereof under the securities laws of
any such state or jurisdiction.
About Stem, Inc.
Stem, Inc. (NYSE: STEM) provides clean energy solutions and
services designed to maximize the economic, environmental, and
resiliency value of energy assets and portfolios. Stem's leading
AI-driven enterprise software platform, Athena®, enables
organizations to deploy and unlock value from clean energy assets
at scale. Powerful applications, including AlsoEnergy's PowerTrack,
simplify and optimize asset management and connect an ecosystem of
owners, developers, assets, and markets. Stem also offers
integrated partner solutions to help improve returns across energy
projects, including storage, solar, and EV fleet charging.
Cautionary Statement Regarding Forward-looking
Statements
This press release, as well as other statements we make, contain
"forward-looking statements" within the meaning of the federal
securities laws, which include any statements that are not
historical facts. Such statements often contain words such as
"expect," "may," "can," "believe," "predict," "plan," "potential,"
"projected," "projections," "forecast," "estimate," "intend,"
"anticipate," "ambition," "goal," "target," "think," "should,"
"could," "would," "will," "hope," "see," "likely," and other
similar words. Forward-looking statements address matters that are,
to varying degrees, uncertain, such as statements about the terms
of the Offering, whether Stem will be able to satisfy the closing
conditions to consummate the Offering and the anticipated use of
proceeds of the Offering. Such forward-looking statements are
subject to risks, uncertainties, and other factors that could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements, including changes as a result
of market conditions and the risk that the Offering will not be
consummated. These forward-looking statements are based upon
assumptions and estimates that, while considered reasonable by Stem
and its management, depend upon inherently uncertain factors and
risks that may cause actual results to differ materially from
current expectations, including the additional risks and
uncertainties set forth in Stem's most recent Forms 10-K, 10-Q and
8-K filed with or furnished to the SEC. If one or more of these or
other risks or uncertainties materialize (or the consequences of
any such development changes), or should our underlying assumptions
prove incorrect, actual outcomes may vary materially from those
reflected in our forward-looking statements. Statements in this
press release are made as of the date hereof, and Stem disclaims
any intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events
or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20230330005330/en/
Stem, Inc. Ted Durbin, Stem Marc Silverberg, ICR IR@stem.com
Suraya Akbarzad, Stem press@stem.com
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