Item 1.01 Entry into a Material Definitive Agreement.
Convertible Note Offering
On August 17, 2021, Fisker Inc. ("Fisker") completed its previously announced
private offering of $625,000,000 aggregate principal amount of its 2.50%
Convertible Senior Notes due 2026 (the "notes"). The notes were issued pursuant
to, and are governed by, an Indenture, dated as of August 17, 2021 (the
"Indenture"), between Fisker and U.S. Bank National Association, as trustee. The
notes were sold under a purchase agreement (the "Purchase Agreement"), dated as
of August 12, 2021, entered into by and between Fisker and J.P. Morgan
Securities LLC, as representative of the several initial purchasers named
therein (the "Initial Purchasers"). The aggregate principal amount of the notes
sold in the offering was $625,000,000. Fisker also granted the initial
purchasers of the notes an option to purchase, within a 13-day period beginning
on, and including, the date the notes are first issued, up to an additional
$100,000,000 aggregate principal amount of the notes.
The notes are Fisker's senior unsecured obligations and will rank senior in
right of payment to Fisker's future indebtedness that is expressly subordinated
in right of payment to the notes, equal in right of payment with Fisker's future
unsecured indebtedness that is not so subordinated, effectively junior in right
of payment to any of Fisker's future senior secured indebtedness to the extent
of the value of the assets securing such indebtedness and structurally junior to
all indebtedness and other liabilities (including trade payables) of Fisker's
subsidiaries.
The notes will accrue interest payable semi-annually in arrears on March 15 and
September 15 of each year, beginning on March 15, 2022, at a rate of 2.50% per
year. The notes will mature on September 15, 2026 (the "Maturity Date"), unless
earlier converted, redeemed or repurchased by Fisker.
The notes are convertible into shares of Fisker's Class A common stock (the
"Common Stock") at an initial conversion rate of 50.7743 shares of Common Stock
per $1,000 principal amount of notes (which is equivalent to an initial
conversion price of approximately $19.70 per share of Common Stock). The initial
conversion price represents a premium of approximately 30% over the last
reported sale price of the Common Stock on August 12, 2021, which was $15.15 per
share. The conversion rate will be subject to adjustment upon the occurrence of
certain events prior to the Maturity Date. Fisker will increase the conversion
rate for a holder who elects to convert its notes in connection with certain
corporate events or Fisker's delivery of a notice of redemption, as the case may
be, in certain circumstances as provided in the Indenture.
Before June 15, 2026, the notes will be convertible at the option of the
noteholders only if specific conditions are met. On or after June 15, 2026 until
the close of business on the second scheduled trading day immediately before the
Maturity Date, the notes will be convertible at the option of the noteholders at
any time regardless of these conditions. Conversions of the notes will be
settled in cash, shares of Common Stock or a combination thereof, at Fisker's
election.
The notes will be redeemable, in whole or in part, at Fisker's option at any
time, and from time to time, on or after September 20, 2024 and before the 41st
scheduled trading day immediately before the Maturity Date, but only if the last
reported sale price of the Common Stock has been at least 130% of the conversion
price then in effect for at least 20 trading days (whether or not consecutive)
during any 30 consecutive trading day period (including the last trading day of
such period) ending on, and including, the trading day immediately preceding the
date on which Fisker provides notice of redemption at a redemption price equal
to 100% of the principal amount of the notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
In addition, if Fisker delivers a notice of redemption, the conversion rate
applicable to the conversion of a note called for redemption (or deemed called)
during the related redemption period will be increased in certain circumstances.
Fisker estimates that the net proceeds from this offering, after deducting the
Initial Purchasers' discount and estimated offering expenses, will be
approximately $616.2 million (or approximately $714.9 million if the Initial
Purchasers exercise their option to purchase additional notes in full). Fisker
intends to allocate an amount equal to the net proceeds from the offering of the
notes to finance or refinance, in whole or in part, one or more new or existing
"eligible green projects" of Fisker, including PEAR program development, battery
pack assembly and potential localization, the furtherance of new model
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development and technology development. Pending such allocation of net proceeds
to eligible green projects, Fisker intends to use the net proceeds from the
offering to fund the cost of the capped call transactions described below and
for working capital and general corporate purposes.
The foregoing description is qualified in its entirety by the full text of the
Indenture, a copy of which is attached hereto as Exhibit 4.1. The terms of the
Indenture, including the form of the notes attached hereto as Exhibit 4.2, are
incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above with respect to the Indenture and
the issuance of the notes by Fisker is incorporated by reference into this Item
2.03.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 1.01 above is incorporated by reference into
this Item 3.02. The notes were issued to the Initial Purchasers in reliance upon
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Act"), in
transactions not involving any public offering. The notes were resold by the
Initial Purchasers to persons whom the initial purchasers reasonably believe are
"qualified institutional buyers," as defined in, and in accordance with,
Rule 144A under the Act. Initially, a maximum of 41,254,125 shares of Common
Stock may be issued upon conversion of the notes, based on the initial maximum
conversion rate of 66.0066 shares of Common Stock per $1,000 principal amount of
notes, which is subject to customary adjustments.
Item 8.01 Other Events.
Capped Call Transactions
As previously announced, on August 12, 2021, in connection with the issuance of
the notes, Fisker consummated privately negotiated capped call transactions (the
"Capped Call Transactions") with an affiliate of one of the initial purchasers
and certain other financial institutions (together, the "Option
Counterparties"). The Capped Call Transactions are expected to cover, subject to
anti-dilution adjustments substantially similar to those applicable to the
notes, the number of shares of Common Stock underlying the notes. The Capped
Call Transactions are expected generally to reduce the potential dilution to
holders of the Common Stock upon conversion of the notes and/or offset the
potential cash payments that Fisker could be required to make in excess of the
principal amount of any converted notes upon conversion thereof, with such
reduction and/or offset subject to a cap.
The cap price of the Capped Call Transactions was initially approximately $32.57
per share, which represents a premium of approximately 115% above the last
reported sale price per share of Common Stock on the New York Stock Exchange on
August 12, 2021, and is subject to certain adjustments under the terms of the
Capped Call Transactions.
The Capped Call Transactions are separate transactions entered into by Fisker
with the Option Counterparties, are not part of the terms of the notes and will
not change any holder's rights under the notes. Holders of the notes will not
have any rights with respect to the Capped Call Transactions.
The Option Counterparties and their respective affiliates are financial
institutions engaged in various activities, which may include sales and trading,
commercial and investment banking, advisory, investment management, investment
research, principal investment, hedging, market making, brokerage and other
financial and non-financial activities and services. Certain of the Option
Counterparties and their respective affiliates have provided certain commercial
banking, financial advisory, investment banking and other services for Fisker
and its affiliates in the ordinary course of their business in the past and may
do so in the future, for which they have received and may continue to receive
customary fees and commissions.
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Fisker used approximately $90.6 million of the net proceeds from the offering of
the notes to pay the cost of the Capped Call Transactions. If the initial
purchasers exercise their option to purchase additional notes, pending such
allocation of net proceeds to eligible green projects, Fisker intends to use a
portion of the additional net proceeds to fund the cost of entering into
additional capped call transactions.
The foregoing description is qualified in its entirety by the full text of form
of confirmation for the Capped Call Transactions, a copy of which is attached
hereto as Exhibit 99.1. The terms of the form of confirmation for the Capped
Call Transactions are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
4.1 Indenture, dated as of August 17, 2021, between Fisker Inc., as issuer,
and U.S. Bank National Association, as trustee
4.2 Form of Global Note (included as Exhibit A to Exhibit 4.1)
99.1 Form of Capped Call Transaction Confirmation
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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