Shares of Plug Power (NASDAQ: PLUG) soared more than 14% during pre-market trading on Tuesday after the company announced a definitive agreement for a secured debt facility and the retirement of a dilutive debenture. These developments mark a strategic step towards achieving profitability and ensuring sustainable long-term growth.
The hydrogen fuel cell maker revealed it has entered into a new financing arrangement with Yorkville Advisors, securing up to $525 million in secured debentures. The initial tranche of $210 million is expected to close by May 2, 2025.
Plug Power intends to allocate $82.5 million from this tranche to settle a significant portion of its outstanding convertible debenture principal with Yorkville. This move is expected to reduce the potential for dilution by approximately 55 million shares.
In its preliminary Q1 2025 financial results, Plug Power forecasts revenues between $130 million and $134 million, with projections for the second quarter to fall between $140 million and $180 million. This represents a notable improvement in the company’s financial performance over the same period last year.
Plug Power also forecast a sharp decline in net cash usage, from $268 million in Q1 2024 to around $142 million in Q1 2025. The company attributes this reduction in cash usage to a combination of factors, including ramping up its hydrogen production facilities, implementing cost-cutting measures, and negotiating price hikes with a key customer. These strategies are expected to further lower net cash outflows.
Moreover, the New York-based company has deferred some first-quarter collections to allow for the finalization of contracts and invoices, a move expected to bolster future cash flow and revenue growth.
As of March 31, Plug Power reported unrestricted cash reserves of about $296 million. The company has reaffirmed its commitment to capital discipline, saying it does not plan to conduct any additional equity offerings in 2025.
With the new credit facility from Yorkville, ongoing cost-saving initiatives projected to yield over $200 million in annual savings, and prudent management of working capital and capital expenditures, Plug Power is confident in its ability to maintain sufficient liquidity to support its growth plans in the near to mid-term.
As of the latest update, Plug Power (NASDAQ: PLUG) stock is up 14.71%, trading at $1.17.
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