Business Context and Reporting Period
Company: NextDecade Corporation (NEXT)
Filing Type: Form 8-K (Current Report)
Date of Report: March 17, 2021
Event: Entry into a Material Definitive Agreement for the issuance of Series C Convertible Preferred Stock.
Key Financial Metrics and Transaction Details
This filing details a capital raise rather than operational financial results. Key transaction metrics include:
- Aggregate Purchase Price: $24.5 million.
- Securities Issued: 24,500 shares of Series C Convertible Preferred Stock at $1,000 per share.
- Origination Fees: Approximately 2% of shares purchased, issued as additional Series C Preferred Stock (490 total shares allocated to Purchasers).
- Dividend Rate: 12% per annum, cumulative, payable quarterly in cash or in-kind (Company anticipates in-kind).
- Warrants: Detached warrants issued to acquire approximately 0.35% of outstanding common stock (fully diluted) at an exercise price of $0.01 per share.
- Investors: York Capital Management, L.P. (and affiliates), Bardin Hill Investment Partners LP (and affiliates), and Avenue Energy Opportunities Fund II, L.P.
Material Changes and Terms
The filing outlines the terms of the new Series C Preferred Stock, which differ from standard common equity:
- Conversion Price: $2.9632 per share of Common Stock.
- Optional Conversion: Company may convert if the 60-day VWAP of Common Stock exceeds 175% of the conversion price of Series A and Series B Preferred Stock.
- Mandatory Conversion: Required on the earlier of 10 business days following a "FID Event" or March 17, 2031.
- Dilution Cap: Issuance of shares upon conversion or warrant exercise is capped at 19.99% of outstanding common stock until shareholder approval is obtained.
Outlook, Risks, and Contingencies
- Shareholder Approval: The Company must obtain shareholder approval under Nasdaq Listing Rule 5635(d) to issue shares beyond the 19.99% cap. The Company intends to seek this approval at its annual meeting on or before June 30, 2021.
- Closing Conditions: The transaction is expected to close in multiple closings on or prior to March 22, 2021, subject to customary conditions.
- Registration Rights: Holders have demand and piggy-back registration rights for underlying common stock.
- Regulatory Status: The offering is conducted under Regulation D exemptions; securities are not registered under the Securities Act of 1933.
Investor Verification Checklist
- Verify the final closing date and confirmation of the $24.5 million funding receipt.
- Monitor the Company's progress in obtaining shareholder approval for the 19.99% dilution cap by June 30, 2021.
- Review the "FID Event" definition in the Certificate of Designations to understand mandatory conversion triggers.
- Assess the impact of the 12% cumulative dividend (likely paid in-kind) on future equity dilution.
- Confirm the exact number of warrants issued and their impact on fully diluted share count.