Description of the Notes
The Convertible Notes will be senior unsecured obligations of the Company and will accrue interest at a rate payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2027. The Convertible Notes will mature on January 15, 2032, unless earlier repurchased, redeemed, or converted in accordance with their terms. Prior to October 15, 2031, the Convertible Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, the Convertible Notes will be convertible at the option of holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
The Convertible Notes will be convertible into cash, common stock of the Company ("common stock"), or a combination of cash and common stock, at the Company's election. The initial conversion rate, interest rate, and other terms of the Convertible Notes will be determined at the time of pricing in negotiations with the initial purchasers of the Convertible Notes.
Use of Proceeds
The Company intends to use a portion of the net proceeds from this offering to fund the cost of entering into the capped call transactions described below and the remaining net proceeds for general corporate purposes, which may include funding deposits for long-lead equipment and/or collateralizing letters of credit related to expanding and/or accelerating data center development projects.
If the initial purchasers exercise their option to purchase additional notes, then the Company expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions and the remaining net proceeds for general corporate purposes.
Although the Company intends to spend the net proceeds from the offering as set forth above, management will have broad discretion to apply the net proceeds, and the actual use of proceeds may vary significantly from the amounts and expectations above and will depend on a number of factors.
Capped Call Transactions
In connection with the offering of the Convertible Notes, the Company expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers of the Convertible Notes, their respective affiliates, and/or other financial institutions (the "capped call counterparties"). The capped call transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of common stock that will initially underlie the Convertible Notes, assuming the initial purchasers do not exercise their option to purchase additional notes. If the initial purchasers of the Convertible Notes exercise their option to purchase additional Convertible Notes, the Company intends to use a portion of the net proceeds from the sale of the additional Convertible Notes to fund the cost of entering into additional capped call transactions, with the remaining net proceeds used for general corporate purposes.
The capped call transactions are expected generally to reduce potential dilution upon conversion of any Convertible Notes and/or offset any cash payments the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, as the case may be, with such reduction and/or offset subject to a cap targeted at a 100% premium to the last reported sale price of Keel's common stock on Nasdaq on the date of pricing.
In connection with establishing their initial hedges of the capped call transactions, the Company expects the capped call counterparties or ...
