FuelCell Energy Inc (NASDAQ: FCEL) is climbing in the market this morning, trading on gains of more than 15%. The gains come after the company announced an amendment to an agreement in an SEC filing.
Recently, FCEL has issued quite a bit of news. The company has announced compensation plans, positive news from the Nasdaq, financing news, and more. Here’s what’s happening:
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FCEL Stock Gains On Amended Agreement
In an SEC filing issued early this morning, FuelCell Energy said that it entered into the tenth amendment of an agreement signed with Hercules Capital, Inc. in April of 2016.
The company said that the amendment was entered into on July 24, 2019. The amended agreement will have an effective date through September 30, 2019.
Currently, the company has a balance under the agreement of about $11.5 million. However, should the balance on the Loan and Security Agreement be paid down to $5 million or less, the agreement will automatically extend through October 22, 2019.
Along with the agreement, FCEL will make a payment to the lender in the amount of $4 million, which will be applied directly to the outstnading balance, bringing the balnce down to $7.5 million. This is a big deal as the payment will result in a substantial reduction of debt with Hercules Capital.
New Cash Incentive Plan Adopted
Yesterday, July 24, 2019, FCEL issued another 8-K. In the filing, the company announced that its Board of Directors has adopted a new cash incentive plan. The idea of the plan is to retain key executives and motivate these executives to accomplish key goals and objectives.
The plan includes all executives of the company and other key employees. Those listed as beneficiaries to the plan have the potential to receive cash bonuses in an aggregate amount of $495,000. The first payment of these bonuses, accounting for 33% of the total bonuses available was paid on July 22, 2019.
The remaining payments will be based on the receipt of certain customer payments, the closing of a refinancing of the company’s senior secured credit facility and the submission of an updated three year business plan to the Board of Directors of FCEL.
While some may look at the cost of the incentive plan and become concerned, the truth of the matter is that this is a great move. The three objectives mentioned in the plan are key to the growth of the company. So, by incentivising these goals, the company has a stronger chance of achieving them.
Previously Announced Funding Has Been Raised
On July 22, 2019, yet another SEC filing was issued by FuelCell Energy. In this filing, the company announced that it raised about $12.7 milion under a previously announced at-the-market equity program.
In raising the funds, the company issued about 33.3 million shares at an average price of $0.38 per share. In the release, the company said that as of July 19, 2019, under its at the market equity program, it may raise up to $29.3 million.
This is a key announcement as this program gives the company the funding it needs to advance on its plans to enhance shareholder value.
Nasdaq News
Finally, on July 19, 2019, FuelCell energy issued an update with regard to the Nasdaq. The company said that it received a letter from the Nasdaq on July 18, 2019, stating that it is not in compliance with continued listing requirements.
Unfortunately, the price of the stock has been trading below $1.00 per share for more than 30 consecutive business days. This pulls the company out of compliance with listing requirements.
As a result of the deficiency, FCEL was provided a grace period of 180 days to regain compliance. In this period, no actions will be taken by the Nasdaq.
To regain compliance, the stock must trade at a minimum price of $1.00 per share for a period of ten consecutive business days. Nonetheless, the company has plenty of time to get there and has already informed the Nasdaq of its intentions to remedy the issue.
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The Bottom Line
The bottom line here is simple. FuelCell Energy is working hard to reduce debt and increase shareholder value. With the announcement today, not only has an amendment to the agreement with Hercules Capital entered into, debt was reduced by $4 million! That’s a big deal. This combined with financial strength provided through the company’s ATM transactions and the drive put into key executives and employees with the newly-announced incentive plan makes FCEL a compelling stock to watch!
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