BKV Corp Issues $575M 1.625% Convertible Notes, Repurchases Shares

What Happened

• BKV Corporation announced on September 14, 2026 that it issued $575.0 million aggregate principal amount of 1.625% Convertible Senior Notes due October 15, 2031 under an indenture with U.S. Bank Trust Company, N.A. The initial purchasers’ option to buy an additional $75.0 million was fully exercised. Net proceeds were approximately $554.7 million. BKV used about $64.7 million to enter into related capped call transactions and about $35.0 million to repurchase 1,452,282 shares of its common stock at $24.10 per share (the pricing date close). The remainder will be used for general corporate purposes, including repayment of debt and capital expenditures.

Key Details

• Principal and pricing: $575.0M issued (including $75.0M option exercise); net proceeds ≈ $554.7M.
• Interest & maturity: 1.625% per year, paid semi‑annually (Apr 15 & Oct 15), first payment Apr 15, 2027; maturity Oct 15, 2031.
• Conversion terms: Initial conversion rate 31.3161 shares per $1,000 principal (≈ $31.93 per share); conversion restricted before July 15, 2031, then convertible at holders’ election thereafter. Company may settle conversions in cash or cash plus shares based on a 50‑VWAP trading‑day Observation Period.
• Redemption & repurchase rights: Company may provisionally redeem starting Oct 15, 2029 if stock price tests are are met (generally >130% of conversion price on required trading days) and may do a “cleanup” redemption if <10% outstanding. Holders have repurchase rights at 100% principal plus accrued interest upon certain Fundamental Changes.
• Other: Additional/special interest up to 0.50% per year may accrue for certain reporting failures; customary Events of Default apply (including certain payment defaults, covenant breaches, specified indebtedness/judgment thresholds and bankruptcy triggers). Capped call transactions were entered to offset potential dilution (cost ≈ $64.7M).

Why It Matters

• This transaction adds long‑term, relatively low‑cost convertible debt to BKV’s capital structure while giving the company flexibility to use proceeds for debt reduction, capex and general corporate needs. The capped calls and share repurchase reduce some near‑term dilution from potential note conversions.
• Investors should note the conversion price (~$31.93) and the company’s ability to settle conversions in cash or stock — which affects both potential dilution and cash needs. Redemption and fundamental‑change repurchase provisions provide holders with protections that can affect the company’s cash obligations in certain transactions.
• Key investor considerations: change in leverage, potential future dilution if notes convert, and the company’s stated use of proceeds to repay debt and fund capital expenditures.