BKV Corporation (NYSE: BKV) announced plans to offer $400 million in convertible senior notes due 2031 in a private placement to qualified institutional buyers, according to a company statement.

The Denver-based natural gas producer also intends to grant initial purchasers an option to buy up to an additional $60 million in notes, exercisable within 13 days of the initial issuance date.

The notes will be senior, unsecured obligations maturing October 15, 2031, with interest paid semi-annually. BKV may settle conversions in cash, or a combination of cash and common stock, at the company's discretion. The notes become redeemable at BKV's option on or after October 15, 2029, provided the common stock price exceeds 130% of the conversion price for a specified period.

BKV said it plans to use a portion of the proceeds to fund capped call transactions designed to reduce potential dilution to existing shareholders upon note conversion. The company also intends to use up to approximately $35 million of proceeds to repurchase shares of common stock at the pricing date price. Remaining proceeds are earmarked for general corporate purposes, including repayment of outstanding debt and capital expenditures.

The interest rate, initial conversion rate, and other terms will be set at the time of pricing. The notes will not be registered under the Securities Act of 1933 and will be offered solely under Rule 144A.