By Abigail W. Adams
Portland, Me., Feb. 2 – Rocket Lab USA Inc. priced an upsized $300 million of five-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 4.25% and an initial conversion premium of 27.5%, according to a company news release and a market source.
Price talk was for a coupon of 3.75% to 4.25% and an initial conversion premium of 27.5% to 32.5%.
Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC were bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $55 million.
The initial size of the offering was $275 million with a $41.25 million greenshoe.
The notes are non-callable until Feb. 1, 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 $8.04, which represents a premium of 100% over the last reported price of stock.
Net proceeds are expected to be $290.2 million, or $343.5 million if the greenshoe is exercised in full.
Approximately $36.5 million of net proceeds will be used to cover the cost of the call spread, $40 million will be used to repay a portion of borrowings from its equipment financing agreement with the remaining amounts to be used for general corporate purposes, which may include potential acquisitions or strategic transactions.
Rocket Lab is a Long Beach, Calif.-based aerospace manufacturer.
| Issuer: | Rocket Lab USA Inc.
|
| Amount: | $300 million
|
| Greenshoe: | $55 million
|
| Issue: | Convertible senior notes
|
| Maturity: | Feb. 1, 2029
|
| Bookrunners: | Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC
|
| Coupon: | 4.25%
|
| Price: | Par
|
| Yield: | 4.25%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $5.13
|
| Conversion rate: | 195.1029
|
| Call options: | Non-callable until Feb. 1, 2027 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Feb. 1
|
| Settlement date: | Feb. 6
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 3.75% to 4.25% and initial conversion premium of 27.5% to 32.5%
|
| Stock symbol: | Nasdaq: RKLB
|
| Stock price: | $4.02 at market close Feb. 1
|
| Market capitalization: | $1.95 billion
|
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