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Investing.com -- Shares of Plug Power Inc. (NASDAQ:PLUG) surged 12.6% following the announcement of a definitive agreement for a secured debt facility and the retirement of a dilutive debenture, signaling a strategic move towards profitability and long-term growth.
The hydrogen fuel cell company disclosed a new financing agreement with Yorkville Advisors for up to $525 million in secured debentures. The initial tranche of $210 million is expected to close by May 2, 2025.
Plug Power plans to use $82.5 million from this tranche to retire most of its existing convertible debenture principal with Yorkville, which will reduce potential dilution from approximately 55 million underlying shares.
In its preliminary first quarter of 2025 results, Plug Power anticipates revenues between $130 million and $134 million, with a projection for second quarter revenue to range from $140 million to $180 million. This represents a significant improvement in the company’s financial position compared to the same period last year.
Plug Power also reported a substantial decrease in net cash usage, from $268 million in the first quarter of 2024 to a projected $142 million in the same quarter of 2025.
The company’s efforts to ramp up hydrogen plants, implement cost reductions, and negotiate price increases with a key customer are expected to further diminish net cash usage. Additionally, Plug Power has delayed first quarter collections to finalize contracts and invoices, which will likely contribute to improved cash flows and higher revenue in the future.
As of March 31, Plug Power’s unrestricted cash stood at approximately $296 million. The company has emphasized its commitment to capital discipline by not planning any additional equity raises in 2025.
With the new credit facility from Yorkville, ongoing cost reduction initiatives projected to save over $200 million annually, and strategic management of working capital and capital expenditures, Plug Power believes it has sufficient liquidity to sustain its growth in the near to mid-term.
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