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Investing.com -- Houston American Energy Corp . (NYSE:HUSA) stock plunged 30% after the company announced a registered direct offering that will dilute existing shareholders.
The Texas-based energy company entered into a definitive agreement with an institutional investor to sell 81,629 shares of common stock at $14.80 per share. The offering is expected to generate approximately $1.2 million in gross proceeds, with net proceeds of about $1 million after deducting placement agent fees and other expenses.
Houston American Energy stated that it intends to use the proceeds for "general corporate purposes," without providing specific details about planned investments or operational initiatives. The transaction is expected to close around June 25, 2025, subject to customary closing conditions.
The offering price of $14.80 per share represents a significant discount to the company’s previous trading price, contributing to the sharp decline in share value as investors reacted to the news of potential dilution.
Registered direct offerings allow companies to sell shares directly to specific investors without the broader marketing typically associated with public offerings. While such offerings provide immediate capital, they often lead to share price declines due to dilution of existing shareholders’ equity.
The company did not provide additional information about its current operations or how the new capital would support its business strategy in the energy sector.
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