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2024

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'No going-concern fears anymore' for green hydrogen firm Plug Power despite $1.4bn loss in 2023

Author:

Hydrogeninsight


 

Company already increasing price across all offerings, as it vows to cut cash burn

 

US green hydrogen technology company Plug Power has announced in its annual report for 2023 that it is no longer at risk of going under — despite registering a $1.4bn net loss for the year.

 

This was nearly double the loss of $724m in 2022, which itself was further in the red than the $460m loss in 2021.

 

Plug Power, which makes fuel cells and electrolysers as well as producing green H2 in-house to supply its customers, was left with $822m in working capital at the end of 2023, while its unrestricted cash and cash equivalents had fallen from $691m the previous year to only $135m.

 

As such, the company in January entered into an “at market issuance sales agreement” with B Riley Securities, in which the financial firm will buy however many shares Plug chooses to sell it, up to a maximum value of $1bn.

 

While not explicitly stated, the deal apparently comes with a heavily discounted rate. As of 23 February, Plug Power had sold 77.4 million shares of common stock with an aggregate price of $302.1m — or around $0.26 per share, compared to its current market price of around $3.53.

 

On that date, the US green hydrogen company amended the deal so that over the next 18 months, it can direct B Riley to buy up to $11m of shares in common stock on any trading day and up to $55m in shares in any calendar week.

 

However, from 1 June, if Plug Power’s market capitalisation — which currently sits at around $2.1bn — falls below $1bn, the maximum it can force B Riley to buy will fall to $10m of shares per day and $30m per week.

 

Plug Power writes in its annual report filed to the US Securities and Exchange Commission that it “believes that its working capital and cash position, together with its right to direct B. Riley to purchase shares directly from the Company... will be sufficient to fund its on-going operations for a period of at least 12 months... and, as a result, substantial doubt about the Company’s ability to continue as a going concern no longer exists”.

 

However, B Riley itself is reportedly one of the most shorted companies on the market today, with its share price falling by more than 17% after it revealed it would be late in filing its 2023 annual report.

 

Bloomberg has reported that the firm is under investigation by the US Securities and Exchange Commission over its relationship with Brian Kahn and his alleged role in multi-year fraud by hedge fund Prophecy Asset Management.

 

Out of the woods?

 

“First and foremost, our focus the last quarter was solving the going concern problem, which we have done,” Plug Power chief financial officer Paul Middleton said on an investor call today.

 

He noted that the financial stability offered by the B Riley deal could help bring a $1.6bn Department of Energy loan — currently being reviewed by the department’s credit review board — as well as ongoing customer negotiations over the line.

 

The company’s CEO, Andy Marsh, added that a conditional offer on the DOE loan was likely to come through by the end of this month and “by the end of the third quarter, it should be written and finalised”.

 

“Operationally, we are not dependent upon the DOE loan for 2024,” Marsh said, adding that the company would “move ahead more aggressively” on its planned hydrogen production project in Texas, where it has already made capital investments.

 

While the B Riley agreement might keep the company afloat for another year and a half, Plug Power’s executives confirmed that the firm will still have to increase prices “across all offerings” and significantly reduce its spend to turn around its fortunes.

 

“Capex will come down tremendously,” Middleton said, adding that “inventory is a substantial asset we can leverage to reduce the burn in our working capital”.

 

Of course, there is no guarantee that potential buyers would accept higher prices, with so many other electrolysers and fuel cells on the market.

 

Marsh added that the two deals announced the previous week for hydrogen fuel cells for forklifts with logistics firm Uline and an unnamed automaker were both under the new pricing structure, which had been introduced after customer negotiations had already begun.

 

Source:Hydrogeninsight

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