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(Bloomberg) — Bloom Energy Corp. is taking advantage of its high-flying stock price to raise $1.75 billion in a zero-coupon convertible bond to refinance outstanding securities.
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The fuel cell developer is marketing the five-year security with a 50% to 55% conversion premium, according to people familiar with the matter. The San Jose-based company plans to use the proceeds to help fund the exchange of a portion of its outstanding existing convertible debt for cash and common stock.
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Bloom Energy shares fell as much as 4.9% on Thursday in New York after the offering was announced in a statement. The stock had surged more than 500% this year, buoyed by agreements with Brookfield Asset Management and Oracle Corp. to provide power for their artificial intelligence data center infrastructure.
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Morgan Stanley is leading Bloom’s offering, the people said, asking not to be identified as the information isn’t public. The convertible bond, which is due in 2030, is expected to price later Thursday after a day of marketing, the people said. Representatives for Bloom Energy and Morgan Stanley didn’t immediately respond to requests for comment.
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Convertible bonds are a type of debt security that under certain conditions can be exchanged for a certain number of the company’s common shares. Bloom Energy’s offering pays no regular coupon and has a relatively lofty conversion premium, making it a relatively expensive deal for investors compared to other similar issues.
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The offering came after Bloom Energy this week revealed its fourth straight quarter of record revenue. Earlier in the month, the company unveiled a $5 billion strategic AI partnership with Brookfield Asset Management. The partnership will see Brookfield use Bloom’s fuel cells to deliver power onsite to AI data centers.
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