MILPITAS, Calif. - SolarEdge Technologies, Inc. (NASDAQ:SEDG), a global leader in smart energy technology, has announced the pricing of its $300 million 2.25% Convertible Senior Notes due 2029 in a private offering to qualified institutional buyers. The sale is expected to close on June 28, 2024, subject to customary closing conditions.
The notes will pay interest semiannually at a rate of 2.25% per year, with the first payment due on January 1, 2025, and will mature on July 1, 2029, unless repurchased, redeemed, or converted earlier. SolarEdge will not have the option to redeem the notes before June 28, 2027.
Still, post that date, the company may redeem the notes at 100% of their principal amount plus accrued interest if the conditions regarding the sale price of SolarEdge's common stock are met.
Holders of the notes will have the right to convert their notes into cash, SolarEdge common stock, or a combination thereof, under certain conditions. The initial conversion rate is set at approximately 29.1375 shares per $1,000 principal amount of notes, which corresponds to a conversion price of about $34.32 per share.
The notes rank senior in right of payment to any of SolarEdge’s subordinated unsecured indebtedness and equal to its non-subordinated unsecured indebtedness. They are senior unsecured obligations of the company and will be structurally junior to all liabilities of SolarEdge’s subsidiaries.
The estimated net proceeds from the offering are roughly $293.2 million, or approximately $337.2 million if the initial purchasers fully exercise their option to purchase additional notes.
SolarEdge plans to use part of the proceeds to pay for capped call transactions, which are intended to reduce potential dilution upon conversion of the notes. The remainder will be used to repurchase a portion of its 0.000% Convertible Notes due 2025 and for general corporate purposes.
In connection with the offering, SolarEdge anticipates entering into capped call transactions with some initial purchasers or their affiliates. These transactions are expected to reduce potential dilution to SolarEdge's common stock upon conversion of the notes and/or offset any cash payments required upon such conversions, subject to a cap.
The activities of the option counterparties or their affiliates, including purchasing SolarEdge's common stock or entering into derivative transactions, could affect the market price of SolarEdge's common stock or the notes.
This offering is only available to qualified institutional buyers in accordance with Rule 144A under the Securities Act. The notes and any common stock issued upon conversion have not been registered under the Securities Act or any state securities laws and, unless registered, may not be offered or sold in the U.S. without an exemption from such registration requirements.
This news is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. SolarEdge's actual results may differ materially from those projected in the forward-looking statements.
In other recent news, SolarEdge Technologies has maintained a Buy rating from a GLJ Research analyst, despite the company's plans to raise $300 million through senior convertible notes due 2029 and an expected free cash flow (FCF) shortfall of $150 million in Q2 2024.
Meanwhile, Oppenheimer has kept a Perform rating on SolarEdge, emphasizing concerns over its ongoing negative cash flow. The company has also been the subject of price target adjustments by various firms, including Canaccord Genuity, which reduced its target to $38 due to inventory saturation affecting demand in the US and European markets.
In contrast, RBC Capital maintained a Sector Perform rating with a steady price target of $71.00, asserting that SolarEdge's current performance aligns with expectations. Furthermore, the US solar industry, including SolarEdge, is preparing for a potential surge in solar installations following the end of a tariff holiday on solar panels from Southeast Asia.
These recent developments underscore the dynamic financial landscape for SolarEdge Technologies and the broader solar industry.
InvestingPro Insights
Amidst SolarEdge Technologies' announcement of a significant convertible notes offering, real-time data and expert analysis provide a more nuanced view of the company's financial health and market position.
According to InvestingPro data, SolarEdge has a market capitalization of $1.51 billion, reflecting the scale of the company within the renewable energy sector. Still, the company's P/E ratio stands at a negative -5.46, with an adjusted figure for the last twelve months as of Q1 2024 worsening to -8.42, indicating challenges in profitability.
Furthermore, the stock has experienced considerable volatility, with a 1-year price total return plummeting by -89.34%, suggesting investor skepticism about the company's short-term prospects. The recent price per share of $26.4 is significantly lower than the conversion price of the newly issued notes, which may be a factor for potential investors to consider.
Among the several InvestingPro Tips available, two particularly stand out in relation to the article. Firstly, SolarEdge's management has been actively buying back shares, a move that often signals confidence in the company's future from its leadership. Secondly, the Relative Strength Index (RSI) suggests that the stock is currently in oversold territory, which could indicate a potential rebound or at least a pause in the downward trend.
For those seeking a more comprehensive analysis, InvestingPro offers an additional 18 tips on SolarEdge Technologies, which can be accessed by visiting https://www.investing.com/pro/SEDG. Interested readers can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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