8-K: Energy Vault Secures Additional $20M in Convertible Debentures

Energy Vault Holdings, Inc. completed a subsequent closing, issuing an additional $20.0 million in senior unsecured convertible debentures to YA II PN, Ltd. for working capital and project development.

Summary

• Energy Vault Holdings, Inc. (the Company) issued an additional $20.0 million in senior unsecured convertible debentures to YA II PN, Ltd. in a subsequent closing on December 16, 2025.
• This issuance completes the total $50.0 million aggregate principal amount of debentures under the Securities Purchase Agreement entered into on September 22, 2025.
• The debentures were issued at 97% of their principal amount and mature on March 22, 2027, carrying a 7% annual interest rate (18% during an uncured event of default).
• The conversion price is $7.53 per share, which is 150% of the Bloomberg volume-weighted average price (VWAP) of the Common Stock on December 12, 2025.
• Proceeds from the issuance are designated for general corporate working capital and to support energy storage project development, construction, and related growth initiatives.
• Scheduled monthly installments of principal and accrued interest will commence on January 26, 2026.
• The Company has options to satisfy installments via cash (with a 7% premium), conversion by the Investor (at the lower of the Fixed Price or 97% of the lowest daily VWAP, subject to a floor price), or a combination.
• The Investor's conversion is capped at 19.99% of outstanding Common Stock without stockholder approval and 4.99% beneficial ownership.

Sentiment

Score: 5

Explanation: While securing funding is positive for growth, the terms of the convertible debentures (discounted issuance, high interest rate, potential for significant dilution at variable conversion prices, and increasing costs during Amortization Events) introduce considerable financial risk and potential shareholder dilution.

Positives

• Secured an additional $20.0 million in funding, bringing the total capital raised under this agreement to $50.0 million.
• Funds are allocated for general corporate working capital and to support energy storage project development, construction, and related growth initiatives, which are crucial for the Company's expansion.

Negatives

• Debentures were issued at a discount, at 97% of their principal amount.
• The debentures carry a high annual interest rate of 7%, which escalates significantly to 18% during an uncured event of default.
• Potential for significant shareholder dilution exists as the Investor can convert unpaid installments at a price equal to the lower of the Fixed Price ($7.53) or 97% of the lowest daily VWAP during the four trading days prior to conversion, subject to a floor.
• Cash payments for installments incur a 7% premium on the principal portion, increasing to 10% during an Amortization Event.

Risks

• **Dilution Risk**: The Investor may convert debentures at a price equal to the lower of the Fixed Price ($7.53) or 97% of the lowest daily VWAP during the four trading days prior to conversion, potentially leading to significant dilution for existing shareholders.
• **Increased Cost of Capital**: Amortization Events (e.g., common stock trading below the Floor Price for 5 of 7 consecutive trading days, exceeding the Exchange Cap without stockholder approval, or inability to use the resale registration statement for 10 consecutive trading days) will increase required monthly installment amounts and raise the cash Payment Premium to 10%.
• **Floor Price Risk**: The conversion price for installment conversions will not be less than a floor price equal to 20% of the VWAP on the trading day prior to closing, which could still be significantly lower than current trading prices.
• **Exchange Cap Risk**: If the Company issues in excess of 99% of the shares available under the Exchange Cap (19.99% of outstanding Common Stock) without requisite stockholder approval, it triggers an Amortization Event, increasing the cost of the financing.

Future Outlook

Net proceeds are expected to be used to fund general working capital, development, construction, and/or investment in energy storage projects, and general corporate and administrative expenses, indicating a focus on supporting ongoing operations and growth initiatives.

Industry Context

This financing event for Energy Vault, a company focused on energy storage, aligns with the broader industry trend of increasing investment in renewable energy infrastructure and grid modernization. The capital infusion is intended to fund the development and construction of energy storage projects, a critical component for the transition to a more sustainable energy landscape.

Stakeholder Impact

• **Shareholders**: Potential for significant dilution due to the convertible nature of the debentures, especially if the stock price declines and conversions occur at lower VWAP-linked prices. The increased cost of capital could also impact future profitability.
• **Creditors**: The debentures are senior unsecured, placing them above equity but below secured debt in the capital structure. The 7% interest rate (18% default) provides a return for the investor.
• **Employees, Customers, and Suppliers**: The funding supports ongoing operations and project development, which could stabilize employment, ensure project delivery, and maintain supplier relationships, contributing to business continuity.

Next Steps

• The Company will begin satisfying scheduled monthly installments of principal and accrued interest starting January 26, 2026.
• The Company expects to file the subsequent Debenture as an exhibit to its next periodic report.

Key Dates

Recommendation

While the capital raise provides necessary funding for growth initiatives in the energy storage sector, the terms of the convertible debentures introduce significant potential for shareholder dilution and increased cost of capital. The high interest rate and variable conversion terms, particularly the ability to convert at a discount to VWAP, could pressure the stock price. Investors should hold and monitor the company's execution on its projects and the impact of future conversions on share count and earnings per share.

Keywords

Energy Vault, NRGV, convertible debentures, financing, capital raise, energy storage, working capital, debt, SEC filing, 8-K, YA II PN, Ltd.