Shares of Energy Fuels (NYSEMKT:UUUU) entered 2021 on a down note today, falling 7.5% through the closing bell. The drop came in response to a Form 8-K filing that Energy Fuels made with the Securities and Exchange Commission (SEC)...last week.
Specifically, Energy Fuels made the filing around 5:10 p.m. last week after close of trading for the day, for the week, and for the year, too, for that matter.
Monday, therefore, was the first chance investors got to react to Energy Fuels' announcement that "in connection with its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co., H.C. Wainwright & Co., LLC and Roth Capital Partners," it plans to sell "up to an additional $35 million of common shares."
To raise the targeted $35 million, Energy Fuels would need to issue and sell about 8.9 million new shares priced "at-the-market." And because Energy Fuels only has about 115 million shares currently outstanding, issuing all these new shares would result in current shareholders being diluted out of about 7.2% of their ownership stake in the company.
It's therefore probably no coincidence that Energy Fuels stock declined by a little more than 7% today. Shareholders are viewing their shares as less valuable because they will probably soon represent a smaller ownership interest in the company.
There is a plus side to this deal, however. Thirty-five million new dollars in Energy Fuels' bank account will more than double the money in the company's cash war chest, dwarfing the mere $9 million in debt on the company's books. If Energy Fuels saw a need for more cash and decided to sell these shares...well, it seems to me that selling after a 126% run-up in share price over the past 12 months makes now a pretty good time to do just that.