The company just issues 52 million shares at more than a 10% discount to yesterday’s closing price. Before this, the company had 178 million shares. For those of you with rudimentary math skills, that equates to a little more than a 29% dilution to the current shareholder base.
The stock is sharply lower in the pre-market, obviously.
The reason for the filing? It’s simple. They want to survive.
They intend to use the proceeds to pay down a $1.5 billion credit facility. The banks in 2008-2009 did the same thing. You should know what you’re getting involved with, prior to buying into the energy space. Starting 2017, there is going to be a hell-storm of debt starting to mature. To meet the expenses or refinance the debt, companies will either tap the bond market or file dilutive jaw-breaking secondaries, like the AKS one today.
Enjoy.
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