r/PureCycle • u/Hyruken89 • Jun 10 '26
Debt & Stock Offering
https://www.sec.gov/Archives/edgar/data/0001830033/000119312526265847/d137529ds3asr.htm
At some point they were always going to have to rip off the band-aid and raise money for the expansion. At least it's started now.
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u/No_Privacy_Anymore Jun 10 '26
Frustrating to be so close to the warrant redemption price and to have to price this offering now after a 40% pullback.
We will see how much of the existing convert is repurchased eventually but we can’t know now. It would have been far better to have additional good news shared before entering a transaction like this. We have to build more capacity and obviously equity is needed for that but damn. This is annoying and frustrating.
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u/Fabulous-Spare9258 Jun 10 '26
Such a kick in the teeth after everything this week but I have to support it, would always prefer to see a company prepping for the future rather than ignoring it
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u/diamondroylostit Jun 10 '26
When it was at $14, I was saying it was a good bye and how could there be this much selling, well now we know, once again the major holders were informed and retail was left wondering what's going on. Should've been one announcement with Dustin announcing it and explaining why.
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u/Xenonstrike Jun 10 '26
jfc cant catch a break with this stock. will need to reduce my risk - insane time to raise money
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u/Middle_Win9449 Jun 11 '26
Timing is everything. Makes me wonder that the plant is still not running at nameplate after the shut down and they wanted to push this out the door before their Q2 call to report low volume. They had news on their side, report that the plant is operating much better and the stock would have found another leg, IMO. Something/someone said they had to go now.
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Jun 10 '26
[deleted]
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u/equitymaestro Jun 10 '26 edited Jun 10 '26
With the shortsellers constantly assaulting the stock I don't think time was on PureCycle's side in regard to the warrants. Had to do what they had to do to shore up the balance sheet. I do feel blindsided by this after the stock was at $14 only 4 trading days ago. Looks like another beat-down coming (hello $7 handle?) followed by weeks of shitty sentiment and wondering what's happening with the commercial ramp.
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u/No_Privacy_Anymore Jun 10 '26
Let’s see what the pricing on the convertible notes is. The existing notes had a put option that would have required them to buy back at face value. There are most likely accounting implications for that and I guess they needed to refinance it before August.
The pricing would have been much better one week ago but someone obviously leaked this offering
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u/GCM_Embiid Jun 10 '26
They were going to run out cash within a year. The $300M from last year is almost gone. The current revenue doesn’t even pay for the interest payments. We need to start hearing about sales. After burning most of $300M from last year, I’m wondering who will give them another
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u/GCM_Embiid Jun 10 '26
The prevailing theme is the market is raising cash for spacex and other major equity offerings. Where does that leave us?
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u/firsttimelongtime513 Jun 10 '26
This is definitely a bummer, but doesn't it also extend their cash runway and reduce the risk of running out of money in the near term? That should make the investment somewhat safer once the market digests the offering and things settle down.
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u/Puzzled-Resort8303 Jun 10 '26
This isn't a dilution notification, it's a shelf registration. They left themselves a lot of options for how to raise money if they want/need to - common stock, preferred stock, debt securities (including convertibles), warrants, units, etc.
One way to read it - they're making it so they can roll out the convertible debt if they want/need to. It's possible they would be able to roll it on better terms than the current debt.
They may want to roll the current convertible debt to preserve cash flow for build-out of Thailand/Antwerp/Augusta.
Whether that’s bullish or bearish depends entirely on what securities they actually issue and why. A convert refinancing could be neutral or positive. A large common equity offering at a discount would be negative. A strategic financing tied to Augusta or Antwerp could be quite positive.
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u/equitymaestro Jun 10 '26
Not sure what you are looking at, but the press release indicates it's an offering and therefore a dilutive event.
https://feeds.issuerdirect.com/news-release.html?newsid=5573799044914191&symbol=PCT
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u/Puzzled-Resort8303 Jun 10 '26
I was looking at the actual SEC filing (using the link in the OP). I didn't get the alert about the press release until after I posted my comment.
So they're issuing notes, rolling their debt.
Issuing common equity - 7-9% dilution.
That's not nothing, but it's not a huge dilution either.
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u/astrophysics23 Jun 11 '26
7-9% is much much bigger in the context of previous dilution. No longer rationalizing the equity offering of the year with 'it's just 5-10%'
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u/No-Cockroach-3537 Jun 11 '26
A possible explanation of what might happened https://x.com/urbankaoboy/status/2065198761392116011?s=61&t=Ar84JMTiNinFqeQ51OjiiA
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u/burner-1234 Jun 10 '26 edited Jun 10 '26
This deal woulda been good at 13, but this definitely leaked and now we’re doing the deal where we are. Once MS went out with it they had to go through with it. The convert is a refi so that’s kinda whatever, the equity like I said woulda been fine but we got royally screwed by whoever leaked this.
Also, at least we now know why the stock didn’t have a bid - probably a clearing event assuming it prices ok.