What happened
Shares of Infinera Corp. (INFN 1.45%) were down on Wednesday after the networking hardware and software provider announced plans to sell $200 million of convertible senior notes. The stock was down 14.5% at 11:30 a.m. EST.
So what
Infinera plans to offer $200 million of convertible senior notes due 2027 in a private placement. The initial purchaser will also be granted a 13-day option to buy up to $30 million worth of additional notes.
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Infinera plans to use the proceeds from the offering for general corporate purposes. This includes working capital to fund growth and new strategic projects.
Now what
This move comes a little more than a week after Infinera reported its fourth-quarter results. The company beat analyst expectations across the board, with revenue growing by 15% year over year and a return to profitability on an adjusted operating basis. The company is nowhere close to profitable under generally accepted accounting principles (GAAP).
At the end of 2019, Infinera had $109 million of unrestricted cash and total debt of $355 million. Cash flow from operations was negative throughout 2019, leading to a shrinking cash balance and a growing debt load. The offering will give the company more resources to pursue growth, but investors don't seem thrilled by the additional debt.
