By Abigail W. Adams
Portland, Me., March 5 – MP Materials Corp. priced an upsized $650 million of six-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 3% and an initial conversion premium of 40%, according to a company news release and a market source.
Price talk was for a coupon of 2.75% to 3.25% and an initial conversion premium of 37.5% to 42.5%.
BofA Securities Inc. was the bookrunner for the Rule 144A offering, which carries an upsized greenshoe of $97.5 million.
The initial size of the offering was $500 million with a greenshoe of $75 million.
The notes are non-callable until March 5, 2027 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $31.06, which represents a 100% premium over the last reported sales price of the stock.
The company repurchased for cash $400 million in principal of its 0.25% green convertible notes due 2026 for $358.4 million in cash in privately negotiated transactions.
The company also repurchased 12.3 million shares, or 6.9% of outstanding shares, prior to the offering for $191.6 million in privately negotiated transactions.
Net proceeds are expected to be $632.8 million or will be $727.8 million if the greenshoe is exercised in full.
Approximately $56.8 million will be used to cover the cost of the call spread, $358.4 million will be used to fund the repurchase of the 0.25% convertible notes due 2026 and $191.6 million will be used to repurchase 12.3 million shares.
Remaining proceeds will be used for general corporate purposes.
MP Materials is a Las Vegas-based specialty materials company.
| Issuer: | MP Materials Corp.
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| Amount: | $650 million
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| Greenshoe: | $97.5 million
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| Issue: | Convertible senior notes
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| Maturity: | March 1, 2030
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| Bookrunner: | BofA Securities Inc.
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| Coupon: | 3%
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| Price: | Par
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| Yield: | 3%
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| Conversion premium: | 40%
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| Conversion price: | $21.74
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| Conversion rate: | 45.9939
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| Call options: | Non-callable until March 5, 2027 and then subject to a 130% hurdle
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| Put options: | Upon a fundamental change
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| Pricing date: | March 4
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| Settlement date: | March 7
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| Distribution: | Rule 144A
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| Talk: | Coupon of 2.75% to 3.25% and initial conversion premium of 37.5% to 42.5%
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| Stock symbol: | NYSE: MP
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| Stock price: | $15.53 at market close March 4
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| Market capitalization: | $2.77 billion
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