SunEdison plans financial restructure
SunEdison announced that it intends to offer, subject to market and other conditions, $400 million aggregate principal amount of convertible senior notes due 2018 (the "2018 notes") and $400 million aggregate principal amount of convertible senior notes due 2021 (the "2021 notes" and, together with the 2018 notes, the "notes") in a private placement. The notes will be offered by the initial purchasers only to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The Company also intends to grant to the initial purchasers a 30-day option to purchase an additional $80 million aggregate principal amount of each series of notes on the same terms and conditions.
The Company intends to use the proceeds of the offering, together with proceeds from the warrant transactions described below and cash on hand, or a combination thereof, to: (1) redeem all $550 million outstanding aggregate principal amount of its 7.75% senior notes due 2019, as well as to pay fees, expenses and redemption premium related thereto; (2) to repay all amounts borrowed under its $200 million second lien term loan with a current interest rate of 10.75%, as well as to pay fees, expenses and prepayment premium related thereto; and (3) fund the cost of convertible note hedge transactions described below (after such cost is partially offset by the proceeds that the Company receives from entering into the warrant transactions described below).
The notes will be senior unsecured obligations of the Company. The notes will be convertible, subject to certain conditions, into cash or, subject to certain shareholder approval requirements, shares of common stock of the Company or a combination of cash and shares of common stock, at the Company's option. The 2018 notes and the 2021 notes will mature on October 1, 2018 and January 1, 2021, respectively, unless earlier converted or purchased. The interest rate, conversion rate, conversion price and other terms of the notes will be determined at the time of pricing of the offering.
The Company expects to enter into convertible note hedge transactions with counterparties that may include the initial purchasers and/or their affiliates (the "hedge counterparties") and in connection therewith, the Company also intends to enter into separate privately negotiated warrant transactions with the hedge counterparties. These convertible note hedge transactions are expected to reduce the potential dilution with respect to the Company's common stock upon conversion of the notes or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, upon any conversion of notes; however, the warrant transactions could have a dilutive effect with respect to the Company's common stock to the extent that the market price per share of the Company's common stock exceeds the strike price of the warrants.
The Company has been advised that, in connection with establishing their initial hedge positions with respect to the convertible note hedge and warrant transactions, the hedge counterparties and/or their affiliates expect to purchase shares of the Company's common stock or enter into various derivative transactions with respect to the Company's common stock concurrently with, or shortly after, the pricing of the notes. These hedging activities could increase (or reduce the size of any decrease in) the market price of the Company's common stock or the notes.
In addition, the hedge counterparties and/or their affiliates may modify their hedge positions (and are likely to do so during the conversion period related to any conversion of notes or following any repurchase of notes by the Company on any fundamental repurchase date or otherwise) by entering into or unwinding various derivatives with respect to the Company's common stock or purchasing or selling common stock or other securities of the Company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes.
The notes, and any shares of the Company's common stock issuable upon conversion of the notes, have not been and will not be registered under the Securities Act, or any state securities law, and may not be offered or sold in the United States or to, or for the account or benefit of, any U.S. persons absent registration under the Securities Act, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, including the notes or any shares of the Company's common stock issuable upon conversion of the notes, nor shall there be any offer, solicitation or sale of any securities, including any notes or any shares of the Company's common stock issuable upon conversion of the notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.
