Shares of Clean Energy Fuels (CLNE 8.00%) are up 13.9% as of 3:05 p.m. ET Wednesday after the renewable natural gas (RNG) development and delivery specialist announced a new financing facility of up to $400 million with alternative investment firm Stonepeak. Stonepeak specializes in infrastructure and real assets, and has $57.9 billion of assets under management.
Some welcome financial flexibility for Clean Energy Fuels
According to a press release this morning, Clean Energy Fuels' agreement will start with a six-year $300 million senior secured term loan bearing interest at 9.5% per annum. It also provides a two-year delayed draw term loan commitment of an additional $100 million.
In connection with the deal, Clean Energy also issued stock warrants to Stonepeak for the purchase of 10 million shares of common stock with an exercise price of $5.50 per share, as well as 10 million shares at an exercise price of $6.50 per share. The warrants expire on June 15, 2032, and are exercisable at any time after Dec. 12, 2025. Clean Energy stock is trading at $3.60 per share as of this writing.
The move provides significant financial flexibility for Clean Energy Fuels as the company works to capitalize on growing demand for RNG, especially as heavy-duty transportation fleets shift to the fuel. For perspective, Clean Energy Fuels ended last quarter with just over $174 million in cash on its balance sheet, and roughly $225 million in total debt (including long-term debt of $145.5 million). Revenue last quarter declined 24% year over year to $95.6 million, as falling natural gas prices offset a 4.8% increase in RNG gallons sold.
What's next for Clean Energy stock?
The funds from the facility will be used for a combination of repaying existing loans, providing capital for new RNG production facilities, and expanding Clean Energy's fueling infrastructure targeting the heavy-duty truck market.
"This financing agreement is very timely as we continue to see more RNG development opportunities come our way, and as we anticipate building additional stations to accommodate increased demand due to the arrival of Cummins' 15-liter natural gas engine," stated Clay Corbus, Clean Energy's senior VP for strategic development and head of renewable fuels.
Indeed, management last highlighted Cummins' innovative new natural gas engine when Clean Energy announced quarterly results in November, noting several major heavy-duty truck fleets are currently running successful test units along some of the most demanding trucking routes in the United States.
In the end, if Clean Energy Fuels is able to effectively utilize this new financing facility with StonePeak as it works back toward sustained, profitable growth, it could be great news for long-term shareholders.
