The New Hope Corp Ltd (ASX: NHC) share price is taking a tumble today.
Shares in the S&P/ASX 200 Index (ASX: XJO) coal miner closed yesterday trading for $5.26. In early afternoon trade on Thursday, shares are swapping hands for $5.04 apiece, down 4.2%.
For some context, the ASX 200 is up 0.98% at this same time.
Here's why the New Hope share price looks to be catching headwinds today.
What's sinking the New Hope share price?
This morning, New Hope announced it has successfully priced $300 million of 4.25% senior unsecured convertible notes. After transaction fees, the company foresees net proceeds of just over $293 million.
The miner expects settlement of the notes next Friday, 12 July. The notes will then mature on 12 July 2029 unless redeemed earlier, repurchased or converted in accordance with the terms and conditions.
As the name suggests, the notes are convertible into New Hope shares. New Hope also has the option to settle them for cash. The initial conversion price of the notes is $6.63 a share. That's more than 30% above the current New Hope share price.
So, why is the ASX 200 coal stock under pressure today?
Well, it's likely got to do with some derivative transactions.
According to the release:
In connection with the issuance and pricing of the Notes, New Hope intends to purchase certain privately negotiated cash-settled call options (Capped Call Transactions) from one or more financial institutions…
In connection with the Capped Call Transactions, the Capped Call Counterparties are expected to enter into various derivative transactions involving Ordinary Shares at their discretion, which could affect the market price of Ordinary Shares or the Notes otherwise prevailing at that time.
What did management say?
While the New Hope share price is taking a fall today, the $293 million in new funds should support the miner's longer-term operations and growth plans.
Commenting on the fresh funds, New Hope CEO Rob Bishop said:
The capital provided by this global investor base at favourable terms will be instrumental to our pursuit of initiatives that are consistent with our strategy to maximise shareholder returns.
New Hope CFO Rebecca Rinaldi added, "This transaction represents another important milestone for New Hope in cementing a resilient and flexible balance sheet."
With today's intraday losses factored in, the New Hope share price remains up just over 3% in a year.
Shares in the ASX 200 miner also trade on a fully franked trailing dividend yield of 7.5%.
