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Plug Power ($PLUG) has been doing well in the stock market for some time now, but this week there has been a hitch after the stock fell by more than 10% yesterday and today. And that in a period shortly after the company had its strongest quarter for gross invoices ever. The primary reason for the decline is that the company announced a $750 million public offering of common stock and plans to give the underwriters an option to purchase up to $112.5 million in additional shares. This could potentially add up to a total of $862.5 million.
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Just bite through the sour apple for now?
But that’s not all. The pricing that was subsequently announced involves a larger offering of 38 million common shares at a price to the public of $22.25 per share. The underwriters have granted a 30-day option to purchase up to 5.7 million additional shares at the public offer price, less the underwriting discount. This puts the existing shareholders in the shadow and Plug Power is looking for more cash to accelerate the rapid growth in turnover even more.
The securities described are being tendered on the basis of an automatic shelf registration statement on Form S-3, previously filed with the SEC and declared effective by the same regulator. The latest news is that a preliminary prospectus supplement related to the offering has now been filed with the SEC.
Why this risk?
According to calculations, this plan could bring in $1 billion gross. This is offset by a total of 43.7 million shares that will be issued. At present, the number of shares outstanding stands at 437.7 million shares, which represents 10% dilution of the existing Plug Power shareholders. Knowing that the new shares have a discount of 11%.
Plug Power wants to use the proceeds for a larger production of fuel cells and an entry into the mass production of hydrogen gas, in this way they are supplied with electricity and the process is more efficient and faster. In addition, Plug Power wants to realize more working capital and other general business purposes. This refers to purposes such as: capital expenditure, potential acquisitions, growth opportunities and strategic transactions.
The closing date is on Thursday, November 19, 2020.
In summary, Plug Power used the price increase of recent months to proceed with a capital increase on Monday after trading day. This adds millions in capital for the fuel cell manufacturer, but it also puts the stock market price under considerable pressure.
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