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SPI Energy (NASDAQ:SPI) – a provider of flexible photovoltaic solutions for different use cases – is witnessing a selloff in its shares as its shelf filing to issue up to $100 million through a combination of eligible securities has now become effective.
As a refresher, SPI Energy jumped onto the radar of investors on the 23rd of September when it launched EdisonFuture, its wholly-owned subsidiary tasked with designing and developing electric vehicles and EV charging solutions.
Thereafter, on the 28th of September, SPI Energy filed the Form F-3/A with the U.S. Securities and Exchange Commission (SEC). As per the filing, SPI Energy is utilizing the shelf registration process to “sell from time to time up to $100,000,000 of any combination of the securities described in this prospectus”. These eligible securities include ordinary shares, preferred shares, warrants, subscription rights, debt securities, and, finally, units consisting of any combination of these securities.
On the 30th of September, as part of this shelf registration process, SPI Energy announced a securities purchase agreement with institutional investors. According to the details, the company would sell through a direct offering 2,964,000 shares of its common stock at a price of $5.40 per share, corresponding to $16 million in gross proceeds. This transaction is expected to close at or around the 2nd of October.
In the prospectus, SPI Energy described the purpose behind its shelf filing in the following words:
“Unless the applicable prospectus supplement states otherwise, the net proceeds from the sale of securities offered by the Company will be used for general corporate purposes, which may include additions to working capital, capital expenditures, financing of acquisitions and other business combinations, investments in or extensions of credit to our subsidiaries and the repayment of indebtedness.”
Today, SPI Energy received a Notice of Effectiveness from the SEC, indicating that its shelf filing to issue up to $100 million in securities is now authorized. Given the significant dilution that this development entails, it is hardly surprising that the company’s shares are currently under pressure. As an illustration, the stock is currently down around 20 percent:
So far during 2020, SPI Energy shares are up a healthy 212 percent. Nonetheless, this price level is a far cry from the year-to-date high of $14 that the stock reached on the 23rd of September. Given the substantial interest that the entire EV sphere is currently attracting, expect new entrants, including SPI Energy, to continue exhibiting elevated volatility as investors chase one hot stock after another.