Why Horizon Technologies Finance Stock Plummeted These days
What occurred
Not for the 1st time this year, Horizon Technologies Finance (HRZN -12.13%) is tapping the public markets for a fresh round of capital-raising. Investors clearly did not take into consideration that to be fantastic news, as they aggressively sold out of the stock in reaction. When the smoke cleared, Horizon’s share value closed the day down by a lot more than 12%, a far worse overall performance than the S&P 500 index’s .six% slide.
So what
Horizon produced its initial announcement just after hours on Tuesday, following this up with a pricing update.
The corporation is floating three.25 million shares of its typical stock at a value of $12.50 apiece, which is notably beneath Tuesday’s closing level of $13.27. The underwriters of the situation, a syndicate that consists of Morgan Stanley and Wells Fargo Securities, have been granted a 30-day solution to invest in up to a total of 487,500 more shares collectively.
In Wednesday’s announcement, Horizon stated it aims to use the proceeds of the situation to retire debt from a revolving credit facility. The corporation will subsequently reborrow from the facility to make investments (hopefully) complementary to its small business. It did not give any detail about these investment objectives.
Now what
If any of this sounds familiar to Horizon-watchers, it ought to. In March, the specialty finance corporation floated a two.five million-share secondary stock supplying, with comparable aims for the raised proceeds. This present situation is, of course, bigger, and as a result a lot more dilutive to current shareholders. It is tiny wonder they weren’t all that content to hear of this improvement.
Wells Fargo is an marketing companion of The Ascent, a Motley Fool corporation. Eric Volkman has no position in any of the stocks pointed out. The Motley Fool has no position in any of the stocks pointed out. The Motley Fool has a disclosure policy.
