Atlas Energy Solutions stock price drops due to convertible bond issuance

Investing.com – Atlas Energy Solutions Inc. (NYSE:AESI) shares fell 5.6% on Monday, after the company announced plans to issue $300 million of 3.0% convertible preferred notes due 2031.

These notes will be sold in a private offering to qualified institutional buyers under Rule 144A. Atlas also expects to grant the initial purchasers an option to buy up to an additional $45 million of additional notes within 13 days after the initial issuance.

The company plans to use approximately $66 million of net proceeds to repay outstanding prepaid amounts under the master lease agreement and the interim financing agreement entered into with Stonebriar Commercial Finance LLC, including a $5 million termination fee. In addition, $75 million will be used to repay its outstanding borrowings under its 2023 ABL credit facility.

Atlas will also use part of the proceeds to fund capped call option transactions, and expects to use the remaining portion for general corporate purposes, including purchasing power generation equipment under a global framework agreement with Caterpillar Inc.

These notes will be the company’s senior unsecured debt, will accrue interest with interest paid every six months, and will mature on April 15, 2031. Noteholders will have the right to convert their notes under certain circumstances. Atlas may settle conversions by paying or delivering cash, common stock, or a combination of both.

The company may choose to redeem the notes on or after April 20, 2029, provided that the last reported sales price per share equals or exceeds 130% of the conversion price during a specified period.

After the announcement was released, Bloomberg reported that Atlas Energy is offering a coupon rate of 0.5%-1% for the convertible notes.

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