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Capstone Private Placement Sends Stock Down

A private placement of its common shares to two large investors plunged Capstone Turbine Corp.’s stock price to record lows. The Chatsworth manufacturer expects to net about $6.8 million from the sale, with the proceeds going toward general corporate purposes and working capital. The stock offering involves an existing investor and a new accredited investor. They will buy 3.6 million common shares and receive warrants to purchase an additional 2.7 million shares at the price of $1.20. “We appreciate the support of our investors as we continue to pursue several larger multi-megawatt projects,” Capstone Chief Executive Darren Jamison said in a prepared statement. “Maintaining a strong balance sheet is critical to our business.” Capstone makes natural gas- and liquid-powered microturbines used in the oil and gas, hospitality, health care and industrial markets. The microturbines, sold throughout the world, are more efficient and clean than other energy producing equipment. Attempts to reach a representative of Capstone were not successful. After the announcement of the sale on Oct. 18, Capstone’s share price took a nosedive of 17 percent to $1.10 from $1.33. On Oct. 26 it closed at $1.02. The stock’s 52-week high was $4.40, a price reached a year ago. In November 2015, the company did a 1-for-20 reverse stock split that increased its price above $4 a share. The purpose of the split was to keep the stock price above the $1 threshold required by the Nasdaq Stock Exchange. The share price began to drop after the split took effect but remained above $1 long enough to meet requirements to keep the stock from being delisted. Following the most recent private placement, at least one observer of the company was pessimistic about its future and recommended that investors may want to bail. Henrik Alex, writing at Seeking Alpha, a crowd-sourced financial markets website based in Israel, said investors should prepare for lower revenue and the company burning through more cash. “With the stock seemingly on its way to new all-time lows, investors should finally sell their holdings and move on,” Alex wrote. “Even a short sale looks still promising here given expectations for further capital raises in the not-too-distant future.” Alex, a day trader based in Germany, does not own shares in Capstone. The proceeds of the sale are considerably lower than what Capstone made when it last sold its stock. In April, the company said it would sell 2.7 million common stock shares and make available Series A and Series B warrants for the purchase of an additional combination of 9.6 million shares. The company expected to net about $13.1 million. Oppenheimer & Co. Inc., in New York, acted as the lead placement agent and Roth Capital Partners, in Newport Beach, acted as co-placement agent for the October share sale.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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