Bloom Energy (NYSE:BE) stock is falling on Thursday following news of the company offering $500 million in convertible senior notes.
These convertible senior notes are due in 2028 and are being offered to qualified institutional buyers. To go along with this, buyers can purchase up to $75 million more of these notes within 13 days of the original notes being issued.
Bloom Energy also revealed what it plans to do with the funds from the notes offering. The company will use a portion of the money raised to redeem the outstanding principal amount of its 10.25% Senior Secured Notes due 2027. The remaining principal on these notes is $57,645,000.
What This Means for BE Stockholders
The simple summary for this is that Bloom Energy is trading one debt for another. With these new notes, it can pay down debts that would mature sooner in favor of new debts that will mature later. That gives the company extra time to ramp up its business and put itself in a better position to pay off debts.
As for BE stock, it’s seeing heavy trading on Thursday as investors react negatively to the convertible senior notes offering. As of this writing, more than 4 million shares have been traded. To put that in perspective, the company’s daily average trading volume is closer to 2.6 million shares.
BE stock is down 14.1% as of Thursday morning and down 32.3% since the start of the year.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
