Business Context and Reporting Period
Company: NextDecade Corporation (NEXT)
Filing Type: Form 8-K (Current Report)
Date of Report: March 10, 2022
Event Date: March 10, 2022 (Agreement); March 14, 2022 (Closing)
NextDecade Corporation entered into a Series C Convertible Preferred Stock Purchase Agreement with Avenue Energy Opportunities Fund II, L.P. ("Avenue"). The transaction was conducted under Regulation D exemptions and closed on March 14, 2022.
Key Financial Metrics and Transaction Details
- Aggregate Purchase Price: $5.5 million
- Shares Issued: 5,500 shares of Series C Convertible Preferred Stock
- Price Per Share: $1,000
- Origination Fee: 110 additional shares of Series C Preferred Stock (approximately 2% of shares purchased)
- Total Outstanding Series C Shares: 54,587 shares following the offering
- Authorized Series C Shares: Up to 166,364 shares
- Dividend Rate: 12% per annum, cumulative, payable quarterly in cash or in-kind (Company anticipates in-kind payments)
Material Changes and Terms
The filing details the issuance of new equity securities and the establishment of specific conversion and warrant terms:
- Conversion Prices: The 5,610 shares issued in this transaction have a conversion price of $4.6080. Other outstanding Series C shares have varying conversion prices ranging from $2.9632 to $5.6216.
- Optional Conversion: The Company may convert all Series C Preferred Stock if the volume-weighted average trading price of Common Stock exceeds 175% of the conversion price of Series A and Series B Preferred Stock for 60 of the prior 90 trading days.
- Mandatory Conversion: Conversion is mandatory on the earlier of 10 business days following a "FID Event" or March 17, 2031.
- Warrants: Detached warrants were issued representing the right to acquire approximately 0.0781% of fully diluted Common Stock at an exercise price of $0.01 per share. Warrants have a three-year term.
Guidance, Outlook, and Risks
Management Commentary: The Company anticipates continuing to elect to pay dividends on the Series C Preferred Stock in-kind rather than in cash.
Risks and Contingencies:
- Unregistered Securities: The Series C Preferred Stock and Warrants were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption.
- Forced Exercise: The Company retains the right to force the exercise of Warrants prior to the three-year expiration under specific market conditions related to Common Stock trading prices.
- Dilution: Conversion prices and warrant exercise prices are subject to anti-dilution adjustments for stock splits, dividends, and certain additional issuances.
Investor Verification Checklist
- Verify the full text of the Series C Certificate of Designations (Exhibit 3.1) for complete rights and restrictions.
- Review the Warrant Agreement (Exhibit 4.1) to understand the specific conditions for forced exercise.
- Confirm the impact of the 12% cumulative dividend accrual on future cash flow or share count (if paid in-kind).
- Monitor the volume-weighted average trading price of Common Stock relative to Series A and Series B conversion prices to assess conversion triggers.
- Check subsequent filings for the registration status of the underlying Common Stock and Warrants.