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Why Shares of Impinj Tumbled Today

By Timothy Green - Dec 11, 2019 at 4:11PM

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The company is raising cash, and the market isn't happy.

What happened

Shares of Impinj (PI 3.73%) were down on Wednesday after the radio-frequency identification solutions provider disclosed a plan to sell $75 million of convertible senior notes. The stock had dropped 10.9% by 3:30 p.m. EST.

So what

Late Tuesday, the tech company announced that it intends to offer new convertible senior notes due 2026 in a private offering to qualified institutional buyers, with an aggregate principal amount of $75 million. The company also expects to grant the initial purchasers of the notes a 13-day option to purchase an additional $11.25 million of the notes.

A declining chart

Image source: Getty Images.

A portion of the proceeds will go toward paying the cost of planned capped call transactions aimed at reducing the potential dilution to the common stock if the notes are converted. About $24 million of the proceeds will go toward prepaying and terminating the company's senior credit facility. The remainder of the proceeds will be used for general corporate purposes.

Now what

Investors may be concerned about the dilution related to these convertible senior notes. It's unclear why Impinj didn't opt for a straight equity or bond sale.

Impinj stock has done well this year, up around 90% even after Wednesday's plunge. But the market clearly doesn't like the company's plan to raise cash.

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