DPW Holdings Inc (NYSEAMERICAN: DPW) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced the closing of a public offering that will drive necessary funds in, exciting investors. Today, we’ll talk about:
- The closing of the offering;
- what we’re seeing from DPW stock as a result; and
- what we’ll be watching for ahead.
DPW Stock Gains On Offering News
As mentioned above, DPW Holdings is having a great day in the market today after announcing offering news. The news was announced via press release early this morning.
In the release, the company said that the offering closed on April 2, 2019. Through the offering, the company brought in gross proceeds of approximately $7 million before deducting discounts, commissions, and other expenses.
DPW said that it will use about $6 million of the net proceeds from the offering for the repayment of debt with its largest creditor.
Through the offering, the company sold 2,855,500 shares of common stock at a purchase price of $0.45. The company also issued warrants to purchase 15,555,500 shares of common stock at an exercise price of $0.45 per share as well as 12,700,000 pre-funded warrants. Each pre-funded warrant is exercisable for one share of common stock at a purchase price of $0.01 per share.
The warrants included in the deal are exercisable upon issuance and will expire five years from the date of issuance. Also, DPW has granted the underwriter an overallotment option to purchase up to an additional 2,333,325 shares of common stock and/or 2,333,325 Warrants to cover over-allotments, if any occur.
Following the offering, the company said that it will not issue any new securities for a period of at least 90 days. In a statement, William B. Horne, CFO at DPW, had the following to offer:
We are very pleased to have closed this offering which has enabled the Company to make a significant reduction of its debt and improve its liquidity and capital structure. We anticipate from this reduction of our senior debt coupled with the previously announced debt reductions this year, our debt service obligations are greatly reduced resulting in improved bottom-line results in future periods.
The Company remains dedicated to our stated goals for 2019 including increasing revenue growth and improving our financial performance. With this offering closed and our debt significantly reduced, we will turn our attention to opportunities to provide added value to our stockholders including the announced spin-off of Digital Farms, Inc.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that it’s important to follow the news. When it comes to DPW, the news proved to be overwhelmingly positive.
While offerings usually turn investors off, this offering came at a price above the current price per share in the market. So, while the company did issue new shares, those purchasing them are paying a price that current shareholders see fit.
So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:09), DPW is trading at $0.29 per share after a gain of $0.02 per share or 7.44% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on DPW. In particular, we’re interested in following the story surrounding the company’s continued work to improve its balance sheet and bring value to investors. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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