FuelCell's Capital Raise, Dilutive But Opportunistic (FCEL)

FuelCell Energy Inc. (NASDAQ: FCEL) is getting hammered this morning.  The developer and manufacturer of fuel cell power plants for electric power generation announced a $24.2 million financing pact this morning.  The company sold 6.7 million shares of common stock at $3.59 per share via Canaccord Adams Inc. and Lazard Capital Markets.

Net proceeds will be earmarked for product development, project financing, expansion of manufacturing capacity, and general corporate purposes.

This $3.59 price is being deemed as a severe discount to yesterdays $4.39 close.  Just keep in mind that this stock was actually under $3.00 on May 15, 2009 and was briefly trading under $2.00 at the peak of selling in early March.

As of last quarter-end, FuelCell had cash and marketable securities at almost $42.4 million and other long-term investments were listed as $10.49 million. Its long-term debt was only $4.48 million and total liabilities were $63.5 million.

It is always easy to second guess a company and say how they are giving shares away to raise cash.  That is unfortunately what has to happen in the green energy sector right now after you have seen a 100% gain from lows.  This company needs to have its cash bolstered because it is expected to lose money this year and next year despite the notions that sales are expected at $105.4 million this year and $165.1 million next year.  Revenue was $100.7 million last year.

Shares are down 15% at $3.70 in early trading and the 52-week range is $1.98 to $8.83.  After today’s drop and before the effects of the offering we have the market cap listed as $259 million.

Jon C. Ogg
June 16, 2009