MP Materials announced today, December 9, 2024, that it has entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with a select group of holders of its 0.25% green convertible senior notes due 2026 (the “2026 Convertible Notes”). The agreement involves exchanging approximately $131.6 million in aggregate principal of the 2026 Convertible Notes for about $106.6 million in aggregate principal of the Company’s 3.00% convertible senior notes due 2030 (the “2030 Convertible Notes”). These newly issued 2030 Convertible Notes will be part of the same series as MP Materials’ existing 2030 Convertible Notes.
The exchanges are expected to settle on or about December 16, 2024, provided that customary closing conditions are met. After completion of these exchanges, the total principal amount of the 2026 Convertible Notes outstanding will be reduced to around $78.4 million, while the outstanding principal of the 2030 Convertible Notes will rise to approximately $854.1 million. This exchange results in a net reduction of approximately $25 million in the Company’s outstanding debt.
MP Materials anticipates that some or all holders of the 2026 Convertible Notes who participate in the exchange may engage in market transactions involving the Company’s common stock. These participants may purchase shares of MP Materials’ common stock in open market transactions or enter into derivatives to unwind any hedge positions related to their investment in the 2026 Convertible Notes. Similarly, holders of the newly issued 2030 Convertible Notes may buy or sell the Company’s common stock in the open market or use derivatives to hedge their investments in the 2030 Convertible Notes. These activities could lead to significant fluctuations in the market price of MP Materials’ common stock.
Additionally, the Company has been informed that J. Wood Capital Advisors LLC (“JWCA”), MP Materials’ financial advisor for the exchange transactions, intends to purchase approximately 750,000 shares of MP Materials’ common stock in privately negotiated transactions, concurrent with the exchanges. These purchases will be made at a discount to the last reported sale price of the Company’s common stock on December 9, 2024. JWCA has agreed not to sell these shares for 30 days. The concurrent purchases by JWCA may have an impact on the market price of MP Materials’ common stock or the 2030 Convertible Notes, either increasing or mitigating any decreases in their prices.
It is important to note that the exchanges and any common stock that may be issued upon conversion of the 2030 Convertible Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, or any other securities laws. As such, the 2030 Convertible Notes and any common stock issued upon conversion cannot be offered or sold except in transactions that are exempt from, or not subject to, the registration requirements of the Securities Act and other applicable securities laws. This press release does not constitute an offer to sell, or a solicitation of an offer to buy, the 2026 Convertible Notes, the 2030 Convertible Notes, or any common stock that may be issued upon conversion of the 2030 Convertible Notes. There will be no sale of these securities in any jurisdiction where such offers or sales would be unlawful.
This strategic exchange of debt obligations represents a key move by MP Materials to reduce its overall debt load while extending the maturity of its convertible notes. The Company continues to focus on strengthening its financial position as it moves forward with its growth initiatives in the materials sector.
