SolarEdge Technologies, Inc. (NASDAQ:SEDG) has entered into a definitive agreement to sell $300 million in convertible senior notes, according to a recent SEC filing. The private offering of 2.250% Convertible Senior Notes due 2029 was made to qualified institutional buyers.
The notes were sold to initial purchasers headed by Goldman Sachs & Co (NYSE:GS). LLC on Friday, June 28, 2024. They will mature on July 1, 2029, unless earlier repurchased or converted. Interest on the notes is payable semiannually at a rate of 2.250% per annum.
The notes are senior, unsecured obligations of SolarEdge, ranking equally with all of the company's existing and future liabilities that are not subordinated. They are structurally subordinated to the liabilities of the company's subsidiaries. The net proceeds from the offering, after deducting fees and estimated expenses, were approximately $293.2 million.
SolarEdge also disclosed entering into capped call transactions with certain financial institutions, which are expected to reduce potential dilution to common stock upon conversion of the notes or offset any cash payments made in excess of the principal amount of converted notes, subject to a cap.
The company used approximately $25.2 million of the proceeds from the notes offering to pay for the capped call transactions and approximately $267.9 million to repurchase a portion of its outstanding 0.000% Convertible Notes due 2025. The remainder of the net proceeds is intended for general corporate purposes.
Holders of the notes may convert their notes at any time before April 1, 2029, under certain conditions, and anytime thereafter until the second scheduled trading day immediately preceding the maturity date. The initial conversion rate is 29.1375 shares of common stock per $1,000 principal amount of notes, subject to adjustment.
The offering and sale of the notes and the common stock issuable upon conversion have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This SEC filing does not constitute an offer to sell or the solicitation of an offer to buy any securities.
In other recent news, SolarEdge Technologies appointed Shuki Nir as its new Chief Marketing Officer. In financial developments, SolarEdge disclosed plans to raise $300 million through senior convertible notes due 2029 and provided Q2 2024 earnings guidance, indicating an expected free cash flow shortfall of $150 million. This deviates from the consensus estimate of a $215 million gain. Despite these financial concerns, GLJ Research analyst maintained a Buy rating for SolarEdge while Oppenheimer held a Perform rating, emphasizing the company's ongoing negative cash flow.
Canaccord Genuity adjusted its price target for SolarEdge to $38 due to concerns about inventory saturation, while RBC Capital maintained a Sector Perform rating with a steady price target of $71.00. These are recent developments in the financial landscape for SolarEdge, which currently has $948.8 million in cash and equivalents. 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.
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