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Investing.com -- MDU Resources Group Inc (NYSE:MDU) stock fell 2.6% in after-hours trading Wednesday following the company’s announcement of a $200 million common stock offering.
The North Dakota-based utility and construction materials company said it has commenced an underwritten public offering of $200 million of common shares. The company also plans to grant underwriters an option to purchase up to an additional $30 million of shares.
In connection with the offering, MDU Resources will enter into forward sale agreements with Wells Fargo Bank, Bank of America, and JPMorgan Chase Bank. These agreements allow the company to sell approximately $200 million of shares at a price equal to what underwriters pay in the offering, with settlement expected within 24 months of the offering’s completion.
Wells Fargo Securities, BofA Securities, and J.P. Morgan are acting as joint lead bookrunners for the offering. The underwriters may offer the shares through various channels including the New York Stock Exchange and over-the-counter markets.
MDU Resources indicated it will not initially receive proceeds from the share sale. However, if the company elects physical settlement of the forward sale agreements, it plans to use any net proceeds for general corporate purposes, including debt repayment, capital expenditures, acquisitions, and working capital. The company specifically mentioned using some proceeds to pay for a 49% ownership interest in the Badger Wind Farm project in 2026.
The stock’s after-hours decline suggests investors reacted to potential dilution concerns from the new share issuance.
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