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Item 1.01.
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Entry into a Material Definitive Agreement.
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Indenture and Notes
On May 13, 2020, Plug Power Inc.,
a Delaware corporation (the “Company”), agreed to sell to the several initial purchasers (the “Initial
Purchasers”), and the Initial Purchasers agreed to purchase from the Company, $200.0 million aggregate principal amount
of the Company’s 3.75% Convertible Senior Notes due 2025 (the “initial notes”), pursuant
to a purchase agreement (the “Purchase Agreement”) between the Company and the Initial Purchasers. The Company also granted the
Initial Purchasers an option to purchase from the Company up to an additional $30.0 million aggregate principal amount of the
Company’s 3.75% Convertible Senior Notes due 2025 (the “additional notes” and, together with the initial
notes, the “notes”) pursuant to the Purchase Agreement for a period of 13 days from, and including, the date the
initial notes are issued. The issuance of the initial notes was consummated on May 18, 2020 (the “Closing
Date”).
The net proceeds the Company received
from the offering of the notes was approximately $193.4 million, after deducting the Initial Purchasers’ discounts and commissions
and offering expenses payable by the Company. On the Closing Date, the Company used $15.3 million of the net proceeds
from the offering of the initial notes to pay the cost of the Base Capped Call Transactions (as defined below) and approximately
$90.9 million of the net proceeds from the offering of the initial notes to finance the cash portion of the consideration it delivered
in connection with the Notes Repurchase Transactions (as defined below). The Company intends to use the remaining net proceeds
from the offering to fund eligible green projects designed to contribute to selected Sustainable Development Goals as defined
by the United Nations and for working capital and other general corporate purposes, which may include potential acquisitions and
strategic transactions. If the Initial Purchasers exercise their option to purchase additional notes, the Company expects to use
a portion of the net proceeds from the sale of the additional notes to enter into Additional Capped Call Transactions (as defined
below).
The initial notes were, and any additional
notes will be, issued pursuant to an indenture, dated as of the Closing Date (the “Indenture”), between the Company
and Wilmington Trust, National Association, as trustee (the “Trustee”).
The notes bear interest at a rate
of 3.75% per annum on the principal amount thereof, payable semi-annually in arrears on June 1 and December 1 of each year, beginning
on December 1, 2020, to the holders of record of the notes as of the close of business on the immediately preceding May 15 and
November 15, respectively. The notes will mature on June 1, 2025, unless earlier converted, redeemed or repurchased in accordance
with their terms.
The notes are the senior, unsecured
obligations of the Company and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated
in right of payment to the notes, equal in right of payment to any of the Company’s existing and future liabilities that
are not so subordinated, including the Company’s 5.50% Convertible Senior Notes due 2023 (the “2023 notes”),
effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the collateral
securing such indebtedness, and structurally subordinated to all indebtedness and other liabilities, including trade payables,
of its current or future subsidiaries.
Holders may convert their notes at
their option at any time prior to the close of business on the business day immediately preceding December 1, 2024 in the following
circumstances:
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during any
calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and
only during such calendar quarter), if the last reported sale price per share of the
Company’s common stock, par value $0.01 per share (“common stock”),
exceeds 130% of the conversion price for each of at least 20 trading days, whether or
not consecutive, during the 30 consecutive trading days ending on, and including, the
last trading day of the immediately preceding calendar quarter;
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during the
five business days after any five consecutive trading day period (such five consecutive
trading day period, the “measurement period”) in which the trading price
per $1,000 principal amount of notes for each trading day of the measurement period was
less than 98% of the product of the last reported sale price per share of the Company’s
common stock and the conversion rate for the notes on each such trading day;
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if the Company calls any or all of the notes for redemption, any such notes that have been
called for redemption may be converted at any time prior to the close of business on the second scheduled trading day
immediately preceding the redemption date; and
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upon the occurrence of specified corporate events, as provided in the Indenture.
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On or after December 1, 2024, to the close of business on the second scheduled trading day immediately before the maturity date, holders may convert all or any portion of their notes at the applicable conversion rate at any time at the option of the holder regardless of the foregoing conditions.
The initial conversion rate for the
notes will be 198.6196 shares of the Company’s common stock per $1,000 principal amount of notes, which represents an initial
conversion price of approximately $5.03 per share of the Company’s common stock, and is subject to adjustment upon the occurrence
of certain specified events as set forth in the Indenture. Upon conversion, the Company will pay or deliver, as applicable, cash,
shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s
election.
In addition, following certain corporate
events or following issuance of a notice of redemption, the Company will increase the conversion rate for a holder who elects
to convert its notes in connection with such a corporate event or convert its notes called for redemption during the related
redemption period in certain circumstances.
The notes will be redeemable, in whole
or in part, at the Company’s option at any time, and from time to time, on or after June 5, 2023 and before the 41st scheduled
trading day immediately before the maturity date, at a cash redemption price equal to 100% of the principal amount of the notes
to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s
common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including
at least one of the three trading days immediately preceding the date the Company sends the related redemption notice, during
any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company
sends such redemption notice. No sinking fund is provided for the notes.
If the Company undergoes a “fundamental change”
(as defined in the Indenture), holders may require the Company to repurchase their notes for cash all or any portion of their
notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued
and unpaid interest, to, but excluding, the fundamental change repurchase date.
The Indenture
includes customary terms and covenants, including certain events of default. The events of default, as set forth in
the Indenture, include (i) default by the Company in the payment when due (whether at maturity, upon optional redemption
or any required repurchase, upon declaration of acceleration or otherwise) of the principal of any notes, (ii) default
by the Company for 30 consecutive days in the payment when due of interest on any note, (iii) failure by the Company to
comply with its obligations to convert the notes in accordance with the Indenture upon exercise of a holder’s
conversion right, and such failure continues for five business days, (iv) failure by the Company to give (x) a
fundamental change notice, (y) a notice of certain distributions as provided in the Indenture or (z) a notice of certain
corporate events as provided in the Indenture, in each case, when required by the Indenture and, in the case of clause (z),
if such failure is not cured within three business days after its occurrence, (v) failure by the Company to comply with
its obligations under the Indenture in respect of certain consolidation, merger and asset sale transactions,
(vi) failure by the Company for 60 days after written notice from the Trustee or the holders of at least 25% in
principal amount of the notes then outstanding has been received by the Company and the Trustee to comply with any of its
other agreements under the Indenture or the notes, (vii) default by the Company or any of its “significant
subsidiaries” (as defined in the Indenture) with respect to indebtedness for borrowed money of at least $25.0 million (x) resulting in such indebtedness becoming or being declared due and payable or (y) constituting a failure to pay the principal
or interest of any such indebtedness when due and payable at its stated maturity or otherwise, in each case, subject to cure
period and notice requirements specified in the Indenture,
(viii) final judgment or judgments for the payment of $25.0 million or more (excluding any amounts covered by insurance) in
the aggregate rendered against the Company or any of its significant subsidiaries and (viii) certain events of
bankruptcy, insolvency or reorganization involving the Company or any of its significant subsidiaries.
If an event of default involving certain
events of bankruptcy, insolvency or reorganization with respect to the Company occurs, then the principal amount of, and all accrued
and unpaid interest on, all of the notes then outstanding will immediately become due and payable without any action or notice
by any person. If any other event of default occurs and is continuing, either the Trustee, by notice to the Company, or the holders
of at least 25% of the aggregate principal amount of the notes then outstanding, by notice to the Company and the Trustee, may
declare the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding to become due and payable
immediately. Notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an event of default
relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of
the right of the holders of the notes to receive special interest on the notes for up to 360 days.
In certain circumstances if, at any
time during the six-month period beginning on, and including, the date that is six months after the last date of original issuance
of the notes, the Company fails to timely file certain documents or reports required to be filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or the notes are not otherwise freely tradable by holders of
the notes other than the Company’s affiliates, additional interest will accrue on the notes during the period in which the
Company’s failure to file has occurred and is continuing or such notes are not otherwise freely tradable by holders other
than the Company’s affiliates.
In addition, if, and for so long as,
the restrictive legend on the notes has not been removed in accordance with the terms of the Indenture and the notes, the notes
are assigned a restricted CUSIP number or the notes are not otherwise freely tradable by holders other than the Company’s
affiliates (without restrictions pursuant to U.S. securities laws or the terms of the Indenture or the notes) as of the 375th
day after the last date of original issuance of the notes, the Company will pay additional interest on the notes during the period
in which the notes remain so restricted.
The initial notes were, and any additional
notes will be, offered and sold in a private placement conducted pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). The offer and sale of the notes and any shares of the Company’s common stock issuable
upon conversion thereof have not been and will not be registered under the Securities Act or any applicable state securities laws,
and the notes and any such shares may not be offered or sold except pursuant to an exemption from the registration requirements
of the Securities Act and any applicable state securities laws. This Current Report on Form 8-K is neither an offer to sell nor
a solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
A copy of the Indenture
and form of 3.75% Convertible Senior Note due 2025 are filed as Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report
on Form 8-K and are incorporated by reference herein. The foregoing description of the Indenture
and notes does not purport to be complete and is qualified in its entirety by reference to such exhibits.
Capped Call Transactions
In connection with the pricing of
the initial notes on May 13, 2020, the Company entered into privately negotiated capped call transactions (together, the
“Base Capped Call Transactions”) with Morgan Stanley & Co. LLC and Wells Fargo Bank, National Association
(together, the “Option Counterparties”). The Base Capped Call Transactions cover, subject to customary
anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that underlie the initial
notes, and are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of
initial notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted
initial notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Base
Capped Call Transactions. The cap price of the Base Capped Call Transactions is initially $6.7560, which represents a premium
of approximately 60% over the last reported sale price of the Company’s common stock on May 13, 2020. The cost of the
Base Capped Call Transactions was approximately $15.3 million. If the Initial Purchasers exercise their option to purchase
additional notes, the Company expects to use a portion of the net proceeds from the sale of the additional notes to enter
into additional capped call transactions with the Option Counterparties (together, the “Additional Capped Call
Transactions” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”).
The Base Capped Call Transactions
are, and any Additional Capped Call Transactions will be, separate transactions, in each case entered into between the Company
and the respective Option Counterparty, and are not part of the terms of the notes and will not affect any holder’s rights
under the notes. Holders of the notes will not have any rights with respect to the Capped Call Transactions.
The Base Capped Call Transactions
were, and any Additional Capped Call Transactions will be, entered into by the Company with the Option Counterparties in reliance
upon Section 4(a)(2) of the Securities Act in transactions not involving any public offering. This Current Report on Form
8-K is neither an offer to sell nor a solicitation of an offer to buy any security and shall not constitute an offer, solicitation
or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Copies of the
base call option confirmations with each of the Option Counterparties are filed as Exhibits 10.1 and 10.2 to this Current Report
on Form 8-K and are incorporated by reference herein. The foregoing description of the Capped
Call Transactions does not purport to be complete and is qualified in its entirety by reference to such exhibits.
Amendment to the Forward Stock
Purchase Transaction
In connection with the issuance of the notes, the Company
amended and extended the maturity of the prepaid forward stock purchase transaction that it previously entered into with
Morgan Stanley & Co. LLC in connection with the issuance of the 2023 notes (the “Prepaid Forward Extension”).
The Prepaid Forward Extension is intended to facilitate privately negotiated transactions by which investors in the notes
will be able to hedge their investment. The aggregate number of shares of the Company’s common stock underlying the
Prepaid Forward Extension is 14,397,906. The expiration date for the Prepaid Forward Extension is June 1, 2025. Upon
settlement of the prepaid forward stock purchase transaction, as amended, at expiration or upon any early settlement, Morgan Stanley
& Co. LLC will deliver to the Company the number of shares of the Company’s common stock underlying the Prepaid
Forward Extension or the portion thereof being settled early.
A copy of the
amendment to the forward stock purchase transaction is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated
by reference herein. The foregoing description of the Prepaid
Forward Extension does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Contemporaneous Notes Repurchase
Transactions and Anticipated Unwind of Existing Capped Call Transactions
On May 13, 2020, the Company entered into separate and
individually negotiated transactions with certain holders of its 2023 notes to repurchase approximately $66.3 million in
aggregate principal amount of the 2023 notes for approximately $90.9 million in cash, representing a premium to the principal
amount exchanged and accrued and unpaid interest thereon, and approximately 9.4 million shares of its common stock,
representing the conversion value in excess thereof (collectively, the “Notes Repurchase Transactions”). As a
result of the Notes Repurchase Transactions, approximately $33.7 million aggregate principal amount of the 2023 notes are
outstanding.
In connection with the issuance of the 2023 notes, the Company
entered into capped call transactions (the “existing capped call transactions”) with certain financial institutions
(the “existing option counterparties”). The Company intends to enter into agreements with the existing option counterparties
to terminate a portion of the existing capped call transactions in a notional amount corresponding to the principal amount of
such 2023 notes exchanged. The Company intends to use proceeds that it receives from any such terminations for working capital
and other general corporate purposes.