Shares of PAR Technology (NYSE:PAR) have plummeted today, down by 11% as of 12:30 p.m. EDT, after the company priced a secondary offering announced yesterday. The offering priced at $38 per share, slightly below yesterday's closing price of $40.51.
PAR issued 3.35 million shares at $38 each, raising total gross proceeds of approximately $127.3 million. The underwriter has a 30-day option to purchase an additional 502,500 shares at the offering price. PAR, which provides technology solutions to the hospitality sector, says it expects to use the proceeds from the offering for working capital and general corporate purposes, which may potentially include acquisitions.
It's common for issuers to price secondary offerings below market prices in order to incentivize investors to buy shares. Additionally, this offering represents meaningful dilution to existing shareholders, as there will be an estimated 21.6 million shares outstanding following it.
The COVID-19 pandemic has impacted much of PAR's customer base, which includes more than 100,000 restaurants worldwide. Despite those challenges, PAR's business has been relatively resilient, with revenue in the second quarter increasing 3%. The fresh capital will help strengthen the company's balance sheet, providing greater financial flexibility and liquidity amid ongoing headwinds.
"The COVID-19 pandemic has had a drastic impact, not only on our company but on the restaurant industry as a whole," CEO Savneet Singh said on the last earnings call. PAR finished the second quarter with $58.8 million in cash and cash equivalents, as well as $104 million in long-term debt.