By Abigail W. Adams
Portland, Me., Oct. 27 – Vertex Energy Inc. priced $155 million of six-year convertible notes after the market close on Tuesday at 90 with a coupon of 6.25% and an initial conversion premium of 37.5%, according to a company news release.
Pricing came in line with price talk for a discounted offer price of 90 and at the midpoint of talk for a coupon of 6% to 6.5% and an initial conversion premium of 35% to 40%, according to a market source.
Oppenheimer & Co. Inc. is placement agent for the Section 4(a)(2) offering.
The notes are non-callable until Oct. 6, 2024 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
There will be a special mandatory redemption if the company does not complete its refinery acquisition prior to April 1, 2022.
The notes will be settled in cash, shares or a combination of both at the company’s option provided shareholders approve the issuance of common stock.
Pending shareholder approval, the notes will be settled in cash.
Approximately $33.7 million of net proceeds will be used to fund the acquisition of a refinery, $13 million will be used for initial payments of purchase orders for lead-time equipment; $10.9 million will be used to repay amounts owed under its credit facilities with Encina Business Credit LLC; and $0.4 million will be used to repay equipment leases.
Remaining proceeds will be used for general corporate purposes.
Vertex Energy is a Houston-based refiner of alternative feedstocks.
| Issuer: | Vertex Energy Inc.
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| Securities: | Convertible notes
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| Amount: | $155 million
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| Maturity: | Oct. 1, 2027
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| Bookrunner: | Oppenheimer & Co. Inc.
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| Coupon: | 6.25%
|
| Price: | 90
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| Conversion premium: | 37.5%
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| Conversion price: | $5.89
|
| Conversion rate: | 169.9235
|
| Call options: | Non-callable until Oct. 6, 2024 and then subject to a 130% hurdle or if the refinery acquisition is not completed by April 1, 2022
|
| Put options: | Upon a fundamental change
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| Pricing date: | Oct. 26
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| Settlement date: | Nov. 1
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| Distribution: | Section 4(a)(2) offering
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| Talk: | Discounted offer price of 90, coupon of 6% to 6.5% and initial conversion premium of 35% to 40%
|
| Stock symbol: | Nasdaq: VTNR
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| Stock price: | $4.28 at market close Oct. 27
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| Market capitalization: | $262.34 million
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