| Item 1.01. | Entry Into a Material Definitive Agreement. |
3.00% Convertible Senior Notes due 2030
On March 7, 2024, MP Materials Corp. (the “Company”) completed its previously disclosed private Rule 144A offering of $650.0 million aggregate principal amount of its 3.00% Convertible Senior Notes due 2030 (the “Base Notes”) at an issue price of 100%. The Company granted the initial purchasers an option to purchase, for settlement within a 13-day period beginning on, and including, the date the Company first issued the Base Notes, up to an additional $97.5 million aggregate principal amount of notes, on the same terms and conditions (the “Additional Notes” and, together with the Base Notes, the “Notes”). On March 6, 2024, the initial purchasers elected to exercise the option in full and a total of $747.5 million aggregate principal amount of Notes were issued on March 7, 2024. The Notes were offered only to persons reasonably believed to be qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to Rule 144A under the Securities Act.
The net proceeds from the sale of the Notes were approximately $731.1 million, after deducting initial purchasers’ discounts and estimated offering expenses, but before deducting the cost of the Capped Call Transactions (as defined below). The Company intends to use the net proceeds from the Notes offering (i) to fund the approximate $65.3 million cost of entering into the Capped Call Transactions, (ii) to repurchase approximately 12.3 million shares of common stock, using approximately $191.6 million of the net proceeds from the offering, (iii) to repurchase approximately $400.0 million in aggregate principal amount of its 0.25% green convertible senior notes due 2026 (the “2026 notes”) using approximately $358.4 million of the net proceeds from the Notes offering and (iv) for general corporate purposes.
Capped Call Transactions
On March 4, 2024, in connection with the pricing of the Base Notes, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with certain financial institutions (collectively, the “Counterparties”). On March 6, 2024, in connection with the Initial Purchasers’ exercise of their option to purchase the Additional Notes, the Company entered into privately negotiated additional capped call transactions (the “Additional Capped Call Transactions,” and together with the Base Capped Call Transactions, the “Capped Call Transactions”) with the Counterparties. Certain of the Counterparties are affiliates of the Initial Purchasers under the Purchase Agreement. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Notes, approximately 34.4 million shares of the Company’s common stock, par value $0.0001 per share (“common stock”), the same number of shares initially underlying the Notes. The Capped Call Transactions have an expiration date of March 1, 2030.
The Capped Call Transactions are expected generally to reduce the potential dilution to the common stock upon conversion of the Notes and/or offset cash payments the Company is required to make in excess of the principal amount of the converted Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the initial conversion price of the Notes, or approximately $21.74 per share of common stock, with such reduction and/or offset subject to a cap of initially $31.06 per share of common stock.
The Capped Call Transactions are separate transactions, entered into by the Company with each of the Counterparties, and are not part of the terms of the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions.
The form of the confirmation for the Capped Call Transactions entered into with each of the Counterparties is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Capped Call Transactions does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Indenture
The Company issued the Notes under an indenture, dated as of March 7, 2024 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Indenture (which includes the Form of 3.00% Convertible Senior Notes due 2030 filed as Exhibit 4.2 hereto) is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
