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Clean Energy Prices Senior Notes

Zacks Equity Research

Leading supplier of natural gas fuel, Clean Energy Fuel Corp. (CLNE), announced a private offering of convertible senior notes worth $220 million to qualified institutional buyers. The offering is expected to close on Sep 16, 2013.  

The senior notes will carry an interest rate of 5.25% per annum payable semi-annually. According to the company, initial investors will have a 30-day option to purchase additional notes amounting to $30 million.

The unsecured senior notes are scheduled to mature on Oct 1, 2018, along with an option for conversion into equity shares. As per the transaction, 64.1026 shares of common stock per $1,000 principal amount or $15.60 per share of Clean Energy common stock is the predefined conversion rate for the notes. This reflects a premium of roughly 25% on the closing price of the stock on Sep 10, 2013.

Clean Energy intends to use the expected net proceeds of $213 million (after subtracting the discount given to initial investors and issue-related expenses) to finance its capital expenditure and meet other corporate expenses.

For the second quarter of 2013, Clean Energy reported loss per share of 13 cents, narrower than the Zacks Consensus Estimate of loss of 23 cents per share. Quarter revenue also increased to $88.1 million from $69.8 million in the year earlier quarter on the back of increased delivery of CNG, liquefied natural gas (LNG), and renewable natural gas (:RNG) to customers.
Clean Energy supplies natural gas as an alternative fuel for vehicles. Its customer base, spread across U.S. and Canada, includes refuse, transit, ports, shuttle, taxi, intrastate and interstate trucking, airport and municipal fleet markets.

Seal Beach, Calif.-based Clean Energy currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

However, one can consider energy firms like Range Resources Corporation (RRC), Magellan Midstream Partners LP (MMP) and Dril-Quip, Inc. (DRQ) as attractive investments. All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on RRCRead the Full Research Report on DRQRead the Full Research Report on MMPRead the Full Research Report on CLNEZacks Investment Research