By Emily Bary
Plug Power Announces $1.66 Billion Conditional Commitment to Department of Energy Loan Guarantee
Plug Power Inc. delivered a long-awaited financing announcement Tuesday morning that appeared destined to help fuel a major stock gain.
The alternative energy company received a conditional commitment of $1.66 billion for a loan guarantee from the Department of Energy, the company said in a statement.
The financing will allow Plug Power (PLUG) to improve the development of its network. The company intends to use the money to fund up to six green hydrogen production sites in the US.
Shares were up as much as 70% earlier in morning trading Tuesday, but had pared losses and were recently up about 30%. Short interest accounts for more than 30% of Plug Power's float, and in light of the rally in meme stocks this week, some of Plug Power's gains on Tuesday could be related to that trend.
"The loan guarantee will be critical to growing and scaling not only Plug's network of green hydrogen plants, but also the clean hydrogen industry in the United States," CEO Andy Marsh said in a statement.
Plug Power noted that while the Department of Energy's commitment is a "milestone," there are still several conditions that must be met before the loan guarantee can be officially funded.
"We believe lower cash burn and inventory reductions in 2024, combined with DOE loan disbursement, will likely ease most of the concerns associated with liquidity and scaling," Evercore ISI analyst James West wrote. in a note to clients. He anticipates loan funds will begin to be distributed during the fourth quarter.
The company has been anticipating the deal with the Department of Energy for months, as it works to improve its cash management internally. For example, Plug Power noted in its latest earnings report that its net cash used for operating activities and capital expenditures fell 38% sequentially during the first quarter.
"Inventory reduction remains a key priority in our 2024 cash management strategy," Plug Power said in its earnings release last week.
Through Monday's close, Plug Power shares were down about 61% in 12 months. They are now 49% off over the course of last year.
-Emily Bary
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05-14-24 1114ET
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