Helix Announces Redemption of Its 6.75% Convertible Senior Notes Due 2026
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Insights
Helix Energy Solutions Group's decision to redeem its 6.75% Convertible Senior Notes ahead of the 2026 maturity date is a strategic move that reflects the company's financial management and capital structure optimization. By redeeming these notes, Helix is likely aiming to reduce its interest expenses and potentially deleverage its balance sheet, which could improve its financial ratios and creditworthiness. The redemption at 100% of the principal amount, plus accrued interest and the make-whole premium, indicates that Helix is willing to pay a premium to retire this debt early, which could suggest confidence in its liquidity position and future cash flows.
Investors and analysts would look at the company's ability to cover the redemption costs without significantly impacting its operational capabilities. If Helix can manage this redemption effectively, it may signal to the market a strong financial position, which could have positive implications for the stock price. However, if this leads to a substantial cash outflow that affects the company's ability to invest in growth opportunities or maintain operations, there could be negative consequences for shareholder value.
The energy sector is subject to volatile market conditions and companies like Helix Energy Solutions Group must maintain financial flexibility to navigate these changes. The conversion feature of the Notes into Helix's common stock at a predetermined rate and the company's choice to deliver cash rather than equity upon conversion, prevents dilution of existing shareholders' equity. This decision could be viewed favorably by the market, as it reflects a preference to manage debt without impacting the equity base.
Additionally, the termination of the capped call transactions may lead to a cash inflow to the company, which could be used for various strategic purposes, including further debt reduction or reinvestment into the business. The market's response to these unwind agreements will depend on the terms and the perceived benefits to Helix's financial strategy. A favorable cash influx from the unwind agreements might provide further support to the company's stock, as it could enhance investor confidence in the company's financial engineering and hedging strategies.
From a legal standpoint, the redemption of the Convertible Senior Notes must be executed in accordance with the terms set out in the indenture agreement. Helix Energy Solutions Group's adherence to the proper notice period and the redemption procedures is crucial to avoid any potential legal complications. The legal ramifications of not adhering to these procedures could include disputes with note holders or regulatory issues, which could negatively impact the company's reputation and financial standing.
The press release's disclaimer also highlights the importance of complying with securities laws and regulations. It is a reminder that such financial transactions are subject to legal scrutiny and must be conducted within the bounds of state and federal laws to prevent any unlawful activities. Investors will be reassured by the company's attention to legal detail, which is indicative of robust corporate governance practices.
The Notes may be converted at any time before the close of business on March 18, 2024, the second business day immediately preceding the Redemption Date, unless the Company fails to pay the redemption price. The Notes would be convertible into shares of Helix’s common stock at a rate of 143.3795 shares per
The address of The Bank of New York Mellon Trust Company, N.A., which is acting as the paying agent and the conversion agent, is as follows:
By First Class / Registered / Certified Mail |
By Express / Overnight Delivery |
By Hand or In Person |
||
The Bank of New York Mellon Trust
c/o BNY Mellon Corp Trust 2001 Bryan Street 10th Floor
Attention: Transfers/Redemptions |
The Bank of New York Mellon Trust
c/o BNY Mellon Corp Trust 2001 Bryan Street 10th Floor
Attention: Transfers/Redemptions |
The Bank of New York Mellon Trust
c/o BNY Mellon Corp Trust 2001 Bryan Street 10th Floor
Attention: Transfers/Redemptions |
The Company also intends to enter into unwind agreements with financial institutions to terminate the remaining portions of the capped call transactions entered into in connection with the issuance of the Notes. Under such unwind agreements, the Company currently expects such financial institution would deliver to the Company cash in respect of the remaining portions of the transactions being early terminated.
This press release shall not constitute a notice of redemption with respect to or an offer to purchase or sell (or the solicitation of an offer to purchase or sell) any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Helix
Helix Energy Solutions Group, Inc., headquartered in
Forward-Looking Statements
This press release contains forward-looking statements that involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any statements regarding the redemption, the conversion consideration, the capped call unwind agreements and any impact on our financial and operating results and estimates; any statements regarding our strategy; any statements regarding our business model or the global energy transition; and any statements of assumptions underlying any of the foregoing. The forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors that could cause results to differ materially from those in the forward-looking statements, including but not limited to the terms of the redemption; actions by governments, customers, suppliers and partners with respect thereto; market conditions; results from acquired properties; demand for our services; the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays, which includes delays in delivery, chartering or customer acceptance of assets or terms of their acceptance; our ultimate ability to realize current backlog; employee management issues; complexities of global political and economic developments; geologic risks; volatility of oil and gas prices and other risks described from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including Helix’s most recently filed Annual Report on Form 10-K and in Helix’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. We assume no obligation and do not intend to update these forward-looking statements, which speak only as of their respective dates, except as required by the securities laws.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240116748151/en/
Erik Staffeldt
Executive Vice President and CFO
email: estaffeldt@helixesg.com
Ph: 281-618-0465
Source: Helix Energy Solutions Group, Inc.
FAQ
What is the redemption date for Helix Energy Solutions Group, Inc.'s 6.75% Convertible Senior Notes due 2026?
What is the aggregate principal amount of the outstanding Notes?
What is the conversion rate for the Notes into shares of Helix’s common stock?
What are the Company's intentions regarding the remaining portions of the capped call transactions entered into in connection with the issuance of the Notes?
What is the address of The Bank of New York Mellon Trust Company, N.A.?
