Hydrogen Company Plug Power Surges as It Closes In on $1,6 Billion US Loan




Hydrogen Company Plug Power Surges as It Closes In on $1,6 Billion US Loan.


Plug Power Inc. surged the most in three years after the hydrogen company said it’s getting close to finalizing a $1.6 billion loan from the US Energy Department, and it’s cutting spending to shore up the balance sheet. 


Plug gained as much as 31% Tuesday, the most intraday since January 2021, as the Latham, New York-based company provided its annual business update. It also said an electolyzer production plant in Georgia is now operational, and another one in Tennessee is expected to open soon. 


The government financing will be key for Plug’s growth plans. The company was notified Monday that the agency’s credit-review board is evaluating the application. The rate will be no higher than 6.5%, and Plug Chief Financial Officer Paul Middleton said he expects it to be finalized by the third quarter. The company plans to use the money to support as many as six hydrogen production facilities. 


Middleton, said during the update call:


That lower-cost capital is incredibly helpful,


Read More: Will Hydrogen Fuel a Clean-Energy Future, or Fizzle?: QuickTake


While that will help the company’s long-term plans, it’s still facing a short-term cash crunch as it burns through capital to build out its hydrogen production capacity. The company surprised investors in November by posting worse-than-expected third-quarter earnings and warning that there was doubt it would be able stay in business. It disclosed Jan. 17 plans to sell as much as $1 billion in stock. 


Andy Marsh, Chief Executive Officer, said on the call:


Addressing the critical issue of cash management and resolving our going concern is now our foremost priority.


That may be resolved in the next few months, according to Colin Rusch, an analyst with Oppenheimer & Co. 


Rusch, wrote in a research note:


Plug addressed key concerns, notably on balance sheet resilience, operational cash burn, and reaching critical technology performance benchmarks.


“We believe the company will likely be able to address its going concern notice” in the first quarter. 


The Energy Department said it can’t comment on loan applications. 


Plug is helping lead the charge to promote hydrogen as a clean fuel. For years it specialized in forklifts and freight-handling equipment that ran on hydrogen fuel cells before it began focusing on supplying the gas as well as machines that split the gas from water. 


Plug said Tuesday that fourth-quarter revenue will be about $200 million, well below the $378 million analysts are expecting, and the company will likely take a non-cash goodwill impairment charge of as much as $250 million. It also plans to cut cash spending by 70% from 2023, with reduced capital expenditure and lower investment in inventory.


Plug has received numerous offers to provide financing, but “they are not under terms that are interesting to the company,” Middleton said.



Hot News

FuelCellChina Interviews