FuelCell Energy Inc (NASDAQ: FCEL) is having a strong start to the trading session this morning, gaining more than 75%. The gains come after the company announced a new contract that will provide $200 million in funding. Here’s what’s going on:
FCEL Announces $200 Million In Funding
In a press release issued early this morning, FuelCell Energy announced that it has entered into a strategic corporate loan facility agreement with Orion Energy Partners. As part fo the deal, the company will have access to draws for October and November of 2019 in the amount of $80 million.
In the release, FCEL said that this initial funding will be used primarily to support execution of projects within its $2 billion project backlog. Following the initial funding, an additional $120 million will be made available over the course of 18 months.
In the release, the company said that it will use the initial funding to cover current construction and engineering costs at the Tulare BioMAT project, Bolthouse Farms project and CMEEC U.S. Navy Base fuel cell plant.
The funds will also be used to support future growth. In particular, FCEL said that it will be used in the commencement of construction of the first of three projects with LIPA. The funding will also improve the company’s balance sheet, help the company to repay short-term outstanding construction loan facilities and fund outstanding dividends for Series B Preferred shareholders.
In a statement, Jason Few, President and CEO at FCEL, had the following to offer:
We are pleased to close the new Facility with Orion Energy Partners. This successful transaction underscores the confidence Orion Energy Partners has in FuelCell based on its deep understanding of our business and our strategy, as well as the importance of the role our proprietary fuel cell technology plays in delivering a clean energy future. With this partnership, we have strengthened our balance sheet and have the funding we need to complete construction of several projects in process, continue to execute on our $2 billion backlog and project awards while driving new sales growth, all of which will generate strong cash flow.
As part of the deal, FuelCell energy has granted Orion Energy Partners warrants to purchase up to 20 million shares of its common stock. 8 million of these shares are valued at the October 30, 2019 closing price with 12 million valued at a premium to the October 30th closing price.
Why This News Is Leading To Such A Run
Ultimately, there are a few big reasons that investors are so excited here. Here’s how I see it:
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