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Why Infrastructure and Energy Alternatives Stock Got Crushed Today

By Evan Niu, CFA - Feb 4, 2021 at 1:09PM

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The infrastructure construction company prices a secondary offering as a major shareholder cashes out some gains.

What happened

Shares of Infrastructure and Energy Alternatives (IEA -2.19%) have gotten crushed today, down by 15% as of 12:15 p.m. EST, after the company priced a secondary stock offering. The deal priced at $16.75 per share, a significant discount compared to yesterday's closing price of $21.86.

So what

The company, which goes by IEA, is not issuing or selling any shares. Rather, a large existing shareholder is selling 8 million shares at the offering price. Total gross proceeds from the deal are expected to be roughly $134 million, and the underwriters will have a 30-day option to buy approximately 853,000 additional shares. The selling shareholder is Oaktree Capital (and affiliated funds). The infrastructure construction company will not receive any proceeds from the deal.

A construction team working

Image source: Getty Images.

Now what

Up until now, Oaktree has wielded considerable influence over IEA as it held 47% of total shares outstanding as of Feb. 2, according  to the prospectus. There were approximately 22.9 million shares outstanding as of that date. IEA shares have gained over 400% over the past year, so it isn't too surprising that a major shareholder is looking to cash out some gains.

Last month, the company announced three separate projects that it had won: a $100 million wind farm in Illinois, a 100-megawatt (MW) solar farm in Georgia, and another 118 MW wind farm in Illinois. IEA recently raised its full-year guidance and expects revenue in 2020 to be in the range of $1.7 billion to $1.75 billion.

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Stocks Mentioned

Infrastructure and Energy Alternatives, Inc. Stock Quote
Infrastructure and Energy Alternatives, Inc.
$7.61 (-2.19%) $0.17

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