Array Technologies stock falls after proposed $250M convertible notes offering

Investing.com -- Array Technologies Inc . (NASDAQ:ARRY) stock fell 12% on Thursday after the company announced plans to offer $250 million in convertible senior notes due 2031 in a private placement to qualified institutional buyers.

The solar tracking systems manufacturer said the notes will be senior, unsecured obligations with semiannual interest payments. Array plans to settle conversions by paying cash up to the aggregate principal amount, with the remainder paid in cash, shares of common stock, or a combination of both, at the company’s discretion.

Array intends to use the proceeds to repay $150 million of its outstanding term loan facility and fund capped call transactions designed to reduce potential dilution to its common stock upon conversion of the notes. The remainder will be used for general corporate purposes, which may include additional debt repayments or repurchases of outstanding indebtedness.

The company also plans to grant initial purchasers an option to buy up to an additional $37.5 million in notes. The interest rate, initial conversion rate, and other key terms will be determined when the offering is priced.

In connection with the offering, Array expects to enter into privately negotiated capped call transactions with initial purchasers or their affiliates. These transactions are intended to offset potential dilution from the notes by covering the number of shares initially underlying the notes, subject to a cap.

The company may also use some proceeds to repurchase a portion of its outstanding 1.00% Convertible Senior Notes due 2028, though no assurance was given regarding the amount or terms of any such repurchases.

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