Plug Power Falls After Announcing More Warrants

Shares of alternative energy provider Plug Power (PLUG) are falling after an earlier regulatory filing indicated that an investor exercised warrants to buy the shares.

PACT WITH TECH OPPORTUNITIES: Plug Power announced in an 8K filing earlier that it is in a pact allowing Tech Opportunities to exercise warrants to purchase 10.5M shares of company stock at $1.50 per share. The agreement also allows for Tech Opportunities to get another warrant allowing the investor to purchase 5.25M shares of common stock at an exercise price equal to $2.69 per share. The warrant will be exercisable beginning on October 12 and will remain exercisable until October 12, 2019.

AMAZON WARRANTS: Last week, Plug Power announced a pact with Amazon to utilize Plug Power fuel cells and hydrogen technology in its fulfillment network. Revenues associated with the commercial agreements are expected to be around $70M in 2017. Additionally, Amazon and Plug Power will begin working together on technology collaboration, exploring the expansion of applications for Plug Power's line of ProGen fuel cell engines. Plug Power had granted Amazon warrants to acquire up to 55.29M of Plug Power's common shares at $1.1893 per share. Vesting of the warrants is tied to payments totaling $600M in the aggregate made by Amazon, directly or indirectly, in connection with the purchase of goods and services from Plug Power.

POTENTIAL DILUTION: With Amazon's 55.3M warrants and Tech Opportunities owning 5.3M warrants, the possibility for more dilution in Plug Power is on the table. An increase in the number of shares outstanding in a company can result from a primary market offering, employees exercising stock options, or by issuance or conversion of convertible bonds, preferred shares or warrants into stock. 

FLY INTERVIEW: In an exclusive interview with The Fly from April 5, Plug Power CEO Andy Marsh discussed the company's aforementioned agreement with Amazon, "We really started working with Amazon back in April and we did our first deployment with them in the fourth quarter. In that deployment, we were able to demonstrate our speed by having the system up in eight weeks and they saw the advantages of using fuel cells in their distribution centers. And now we came to an agreement that gives them the opportunity to participate in the ownership of 20% of the company as a purchase of up to $600M worth of goods... I think for the market this is a significant step forward. Plug Power is now converting distribution centers and fulfillment centers for the two largest retailers in North America and the world: Wal-Mart (WMT) and Amazon. So it is exciting news and I think that's why we've seen the stock grow."

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Disclosure: None.

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