Energy giant prices convertible notes to manage debt & fuel strategic growth.
Delek US Holdings prices a $400 million private offering of convertible senior notes due in 2031.
Delek US Holdings has officially priced its private offering of convertible senior notes. The company confirmed the aggregate principal amount reaches $400 million. These notes carry a 0.00 per cent interest rate and mature in 2031. However, the company granted initial buyers an option for an additional $60 million.
This capital injection will support various corporate goals. Delek intends to use these proceeds to fund specific capped call transactions. Furthermore, the remaining funds will help repay outstanding loan facilities. Consolidating debt remains a priority for the diversified downstream energy firm.
The notes represent senior unsecured obligations for the business. Therefore, investors cannot expect regular interest payments from these specific securities. Nevertheless, conversion options provide potential for future equity participation. The initial conversion price sits at approximately $85.31 per share.
This figure represents a premium of 27.5 per cent over recent stock prices. Consequently, Delek may satisfy conversions in cash or in shares at its discretion. Moreover, the company cannot redeem notes before November 2029. A cleanup redemption clause exists if outstanding amounts fall below 10 per cent.
Capped call transactions aim to reduce potential shareholder dilution. Accordingly, these deals cover the same number of shares underlying the new notes. The cap price for these specific transactions targets $117.09 per share. This level reflects a significant 75 per cent premium for participants.
Market activity related to these hedges may influence stock prices. The company expects the transaction to close by late September. Qualified institutional buyers remain the primary target for this private offering. Finally, Delek continues to operate refineries across Texas, Arkansas, and Louisiana.
(Source: Business Wire)
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