What happened
Enovix(NASDAQ: ENVX) was a stock that didn't produce much electricity on the market this week. According to data compiled by S&P Global Market Intelligence, the lithium battery specialist's share price fell by 8% during the period. That drop was attributable to a new financing effort undertaken by the company.
So what
On Tuesday, Enovix announced it was floating $150 million worth of convertible senior notes in a private placement. These securities have an annual interest rate of 3%, to be paid bi-annually, and they mature on May 1, 2028. The company has also granted the initial buyers of the convertible senior notes the option to purchase up to an additional $22.5 million worth of the securities within 13 days of the offer's issue.
The notes are to be convertible at the option of their investors as long as they meet certain conditions. The company will not redeem them before May 6, 2026. After that time, it has set certain criteria for its stock's price performance for the holders to qualify for redemption.
Enovix said its initial conversion rate is 64.08 shares of its common stock for each $1,000 principal amount of the notes. This equates to $15.61 per share of said stock; as of Friday's close, this traded at $12.59 per share.
Now what
Enovix said that it intends to use its anticipated $133.9 million in proceeds from the offering to build its second battery cell manufacturing factory and acquire production lines for its second-generation manufacturing equipment. It will also devote some monies to working capital and for "general corporate purposes."
The company added that the convertible notes will result in roughly 7% dilution to existing shareholders.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
