FuelCell Energy Inc. (NASDAQ: FCEL) has joined the ranks of small cap alternative energy players raising fresh operating capital. The company announced an offering on Thursday evening and the offering priced on Friday. FuelCell is involved in efficient and reliable fuel cell power plants. The discount here came at a steep price.

The company has sold some 22,000,000 shares of its common stock at a price of $1.25 per share. Gross proceeds from the offering will come to roughly $27.5 million, and that should come to about $26.0 million after fees and commissions are paid. If the overallotment option is exercised in full, FuelCell will receive additional gross proceeds of about $4.1 million.

FuelCell Energy intends to use the net proceeds from this offering for project development, project finance, working capital support and general corporate purposes.

Cowen and Company was the co-lead manager, and FBR Capital Markets was listed as co-manager for the offering. Ardour Capital Investments is also a selling group member for the offering. FuelCell announced that it has also granted these underwriters a 30-day option to purchase up to an additional 3,300,000 shares of common stock as an overallotment option.

Where this offering gets interesting is that FuelCell shares closed at $1.64 on Thursday and the 52-week range is $0.84 to $1.95. This stock was up 16% year-to-date ahead of the offering news, from the $1.41 close at the end of 2013. After the first 10 minutes of trading Friday, FuelCell shares were down 20% at $1.30, so the stock just gave back all of its gains for the year.

In the minutes after the opening bell, FuelCell shares had traded more than 7.5 million shares of stock, and that makes for just over a full day’s average trading volume. The adjusted market cap is now $272 million, but that may not include any new shares from the offering.

At the end of September, FuelCell had about $72.7 million in cash and equivalents and direct long-term debt of $52.67 million. Unfortunately, it also had negative net tangible assets of $26 million and negative shareholder equity of $12.4 million.

Last year’s sales gapped up to $187 million (October year-end) from $120 million, and the two analysts that follow the stock expect 2014 sales to grow to $205 million and to grow to $261 million in 2015. This seems to be the right offering, but the discount here seems severe.

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