New Fortress Energy Inc. (NASDAQ:NFE), a company specializing in natural gas distribution, has announced the issuance of Class A common stock in connection with the conversion of its Series B Convertible Preferred Stock.
On Monday, a holder of the Preferred Stock submitted a conversion notice for 20,000 shares, which requires New Fortress Energy to deliver 2,208,612 shares of Class A common stock by January 21, 2025. This follows a recent conversion on January 3, where the company issued 1,673,674 shares upon the conversion of 15,000 shares of Preferred Stock by the same holder.
The remaining Preferred Stock, totaling 61,746 shares, is convertible into up to 6,895,873 shares of Class A common stock. The conversions are being executed pursuant to Section 3(a)(9) of the Securities Act of 1933, indicating that they are exempt from registration requirements and were made in a privately negotiated transaction without any commission or remuneration for solicitation.
This financial activity falls under the category of unregistered sales of equity securities and is reported in accordance with the regulations of the Securities Exchange Act of 1934. The company's Chief Financial Officer, Christopher S. Guinta, signed off on the report, which was filed today.
The issuance of common stock through the conversion of preferred shares is a typical financial transaction for corporations, allowing holders of preferred stock to convert their holdings into a predetermined number of common shares. This process can potentially dilute the value of existing common shares but can also provide the company with a mechanism to reduce debt or other obligations associated with preferred stock.
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