Array Technologies (ARRY) Stock: Why The Price Fell Today

By Amit Chowdhry ● Nov 29, 2021
  • The stock price of Array Technologies Inc (NASDAQ: ARRY) fell by 7% after hours today. This is why it happened.

The stock price of Array Technologies Inc (NASDAQ: ARRY) fell by 7% after hours today. Investors are responding negatively to Array Technologies announcing that, subject to market conditions, it intends to offer $325 million in aggregate principal amount of convertible senior notes due 2028 (the notes) in a private placement to eligible purchasers under Rule 144A of the Securities Act of 1933, as amended.

Array also plans to grant the initial purchasers of the notes an option to purchase (within a 13-day period from) and including the date on which the notes are first issued up to an additional $48.75 million aggregate principal amount of Notes. And Array plans to use the net proceeds from the offering – together with cash on hand and/or borrowings under its revolving credit facility and the issuance of up to $100 million of Series A Preferred Stock pursuant to the Company’s Series A preferred stock facility – to pay the cash consideration for its previously announced acquisition of Soluciones Técnicas Integrales Norland, S.L. (the STI acquisition) and the cost of the capped call transactions described below.

If the initial purchasers exercise their option to buy additional notes, Array Technologies expects to use the net proceeds to fund a portion of the cash consideration for the STI Acquisition, enter into additional capped call transactions with the option counterparties and for general corporate purposes, including the repayment of the company’s term loan. In the event the STI Acquisition is not consummated, Array plans to use the net proceeds from the offering to pay the cost of the capped call transactions and for general corporate purposes, including the repayment of the company’s term loan.

The notes will be senior and unsecured obligations of Array and will accrue interest payable semiannually in arrears. And Array will settle conversions by paying cash up to the aggregate principal amount of the notes to be converted and paying or delivering, as the case may be, cash, shares of Array’s common stock or a combination of cash and shares of the common stock, at Array’s election, in respect of the remainder (if any) of Array’s conversion obligation in excess of the aggregate principal amount of the notes being converted, based on the then applicable conversion rate. The interest rate, the initial conversion rate, and other terms of the Notes will be determined at the time of pricing of the offering.

In connection with the pricing of the notes, Array expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the option counterparties). And the capped call transactions will cover, subject to anti-dilution adjustments, the number of shares of common stock initially underlying the notes sold in the offering.

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