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It sucks that we don't have full visibility to the details of the FCEL / POSCO / XOM license agreements. My thoughts were leaning towards: FCEL / POSCO license agreement prohibited FCEL from any direct sales business in So. Korea. It (IMO) did not say FCEL could not sell indirectly ie. Thru another licensee such as XOM. This provided POSCO with significant leverage in legal arbitration. By FCEL signing the XOM license agreement this leverage was diminished thus reason why resolution occurred shortly thereafter. Again this was only what I conjured up in my own pea brain.
On a separate note, were you expecting a weekly PR or 8K to be issued with update info on ATM sales / Hercules Pmnt updates? I was. thx
OMG! An obscure Monty Python Holy Grail movie reference!! ..lol
Max,
The $42M ATM remaining and the reported OS of 74M just doesn't seem to add up to me. I see it in the 8K's too so I'm not disputing your statement. It's just that there was ~15M OS post RS. That number climbed to 27M post satisfaction of series C PS and satisfaction of a major portion of series D PS. Now somehow it jumps to 74M OS (an additional 47M of CS) and the only result is satisfaction of the then remaining series D PS?
Let's say we use a conservative figure of $0.45/sh for those 47M shares thats ~$21M.
I think FCEL has more cash than what we have visibility of, it could be as simple as them taking advantage of a required reporting time frame but I fail to find a way to account for the OS change. Your thoughts?
It's a $5.75M pmnt to NRG which is due 7-12-2019 to complete satisfaction of loan balance (sorry for re-stating the obvious 2u Max, I thought it prudent to provide clarification) I am confident FCEL will make full payment by deadline. I expect a 8K to be issued on or b4 7-17 confirming. The August 1st-11th dates are ...?...odd I guess. Is Generate just doing a CYA (cover your ass) ??? IDK... Huron due date is August 9 ... not deeply concerned but strangely curious.
Max,
First and foremost I want you to know I'm bullish here.
Second, the 10K info you reference is (as you point out in your post) dated January 4, 2019. The 8K which I referred to is dated May 8, 2019. I'm simply wondering whether and or how such inventoried items will be accounted for upon installation. I assume it would be reported as sales dollars for FCEL and as a depreciable asset on Bridgeport books. yes?
Max,
I've wondered how this portion of the Bridgeport Financing deal relates to inventory / billing dollars ie. intercompany sales ?
See Item 1.01 bottom of 3rd paragraph of 8K link below.
"certain newly manufactured fuel cell modules located at 3 Great Pasture Road, Danbury, CT that are intended to be used to replace the Bridgeport Fuel Cell Project’s fuel cell modules as part of routine operation and maintenance"
https://www.sec.gov/Archives/edgar/data/886128/000156459019019183/fcel-8k_20190508.htm
I agree with your assessment. I too believe FCEL has now (since the XOM licensing agreement announcement) begun to delve into what remained of their ATM. I would applaud them for doing so provided they achieve, as you stated: 1)Full satisfaction of series D PS 2) Hercules loan payoff and 3) NRG loan payoff.
Next Friday (July 12th) is deadline for NRG loan. Followed by the Friday (August 9) Hercules loan (balance refinancing, loan modification or payoff) It appears Generate Lending has done what I see as a "cover your ass" move as evidenced by the 8K (Links' to 8K and the attachments below).
And last let us not forget the $1.4M severance pkg for the former drunk driver leading the ship Chip. ughhh .... what a load of crap.
Given the recent events, news...etc. I see no reason for FCEL to fail meeting any deadlines but we all deserve to have our eyes wide open to what lies ahead.
8K
https://www.sec.gov/Archives/edgar/data/886128/000156459019024539/fcel-8k_20190628.htm
1st Amendment to Construction Loan
https://www.sec.gov/Archives/edgar/data/886128/000156459019024539/fcel-ex101_10.htm
1st Amendment to Right to Finance Agreement
https://www.sec.gov/Archives/edgar/data/886128/000156459019024539/fcel-ex102_11.htm
mulder35, I'm assuming you're question is in regards to the fee aka. "borrow fee". Here's a link to a site which explains and provides examples. (Note one thing ..I've seen fees in excess of 100%) Hope this helps. https://www.virtualbrokers.com/en-us/borrow-fee
Yes and no I guess, yes to have been there to what was likely required to wake him (Art Bottone) up to inform him during his busy day. But.. No .. to handing him his totally, unbelievably and inexplicable severance pkg. This kind of sh*t is just beyond my comprehension. BOD are equally at fault, awww just don't get me started on the inequities.
Probably all the form 4's issued on 4-9 played a role .. go figure... right?
Cool beans Max and krays,
It's always (and I mean ALWAYS) fantastic to know and correspond with knowledgeable, fact finding folk. I can only hope to be considered part of such group. BTW.. Max mentioned a ^5 to you krays for your document / mkt research abilities, I want to second his applause to you in this respect. Now only in jest (because I think we deserve to laugh once and a while) who the heck is "phuck yu" listed as one of the inventors of a FCEL Patent? ... lol
krays & Max,
My apologies but it takes me a few reads (like probably 10 times now anymore) of docs (this one is complex) to connect the dots. krays .. one thing (not trying to be an a-hole) .. the sole remaining owner of the series C PS is/was CVI Investments AKA CVI Holdings. The 2 remaining holders of series D PS are/were CVI Investments and Tech Opportunities LLC.
Max, that OS of 27.4M as of June 13 was first thing I took note of. It's a good thing in some respects 1) the dilution effect already factored in 2) irrespective of the fact us CS shareholders paid for it, somewhere, somehow the numbers will vindicate and reward us.
"Incorrect" is an understatement for sure. I'm trying to make sense of the 27,424,239 OS as of June 13 number. I mean WTF ? this had better be time for the worm to turn .. kind of a last chance for romance. They (FCEL) must be as flush with cash as they've been for years now let's see positive results.
Surprisingly it appears they had not been selling shares to raise cash via their ATM. From pg 18 Note 11. On June 13, 2018, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc. and Oppenheimer & Co. Inc. (together, the “Agents”) to create an at the market equity program under which the Company from time to time may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million through the Agents. Under the Sales Agreement, the Agent making the sales will be entitled to a commission in an amount equal to 3.0% of the gross proceeds from such sales. There were no sales under the Sales Agreement during the six months ended April 30, 2019. As the Company has only sold $8.0 million of shares of common stock under the Sales Agreement as of April 30, 2019, it may sell up to approximately $42.0 million of shares in the future under the Sales Agreement, which is subject to contractual requirements, trading windows and market conditions.
Nice catch Max and good question. It certainly implies that a royalty payment plan is incorporated into the XOM deal why else would XOM feel it necessary to include such language?
Max,
I would sure welcome and appreciate your help in attempting to decipher the "partially offset by Series C preferred stock deemed contributions of $1.6 million for the three month period ended April 30, 2019 compared to Series C preferred stock deemed dividends of $4.2 million for the three month period ended April 30, 2018." statement from pg 3 of NT-10Q.
Link to what I'm reading in attempt to better understand. (scroll to pg 6)
https://www.morse.law/uploads/1495/doc/Tax_Aspects_of_Investor_Financings_-_CAW_Article.pdf
My guess is part went towards series C PS conversion to completion, part went towards series D PS conversion and part of them were sold to generate cash via the ATM. No matter how you slice it, it still represents >$10M on the credit side of FCEL's books (that apparently wont be disclosed in Q2 numbers)
I'm also a bit hesitant to even say that "part went towards series C conversion to completion".
The last sentence of pg 3 from NT-10Q "partially offset by Series C preferred stock deemed contributions of $1.6 million for the three month period ended April 30, 2019 compared to Series C preferred stock deemed dividends of $4.2 million for the three month period ended April 30, 2018."
I've yet to fully decipher that "deemed contributions of $1.6M" but it certainly implies series C PS are fully converted.
Max & krays,
A bit a verifiable info for you to ponder.
In the NT-10Q it states OS as of 4/30 to be 11.1M shares (if you convert to pre split =133.2M)
See top of pg 4 for ref. https://www.sec.gov/Archives/edgar/data/886128/000114420419030604/tv523435_nt10q.htm
In the 8K it states OS as of May 8 to be (pre split amount) 183.4M shares. A difference of ~50M shares (pre split).
See top of pg 2 for ref.
https://www.sec.gov/Archives/edgar/data/886128/000156459019017009/fcel-8k_20190508.htm
Those 50M (or post split 4.2M) shares went towards something and it will undoubtedly be something favorable to FCEL's bottom line (but wont be reported until Q3).
Just to further the discussion regarding inventory I thought it worth pointing out something from FCEL 8K dated 5/14.
As security for the Credit Agreement, Liberty Bank and Fifth Third Bank were granted a first priority lien in (i) all assets of DBFC, including DBFC’s cash accounts, fuel cells, and all other personal property, as well as third party contracts including the Energy Purchase Agreement between DBFC and Connecticut Light and Power Company dated July 10, 2009, as amended; (ii) certain newly manufactured fuel cell modules located at 3 Great Pasture Road, Danbury, CT that are intended to be used to replace the Bridgeport Fuel Cell Project’s fuel cell modules as part of routine operation and maintenance; and (iii) FuelCell Finance’s ownership interest in DBFC.
The (ii) is referencing inventory, It's unclear how inter company / division(s) billing is set up but thought it worth mention.
https://www.sec.gov/Archives/edgar/data/886128/000156459019019183/fcel-8k_20190508.htm
Drgdarf First let me say that your question is by no means "dumb" Second please allow me to say thank you to Max for responding to my complex question.
It is my belief that all of the series C preferred shares where converted prior to the RS. I also believe that a majority of the series D preferred shares were converted prior to RS. They both likely took advantage of the "Initial Conversion" option.
If any series D preferred's do remain outstanding they could benefit by having lowest possible pps at EOD Wed. (10th consecutive day >1.00) However, I think now that FCEL has freed up shares they've been selling some through the ATM of which they had $30M remaining available.
These are obviously just my own best guesses so take them with not just a grain but a big lump of salt.
Max, one more request for your help. In the "Initial Conversion" formula from (link below) there is a figure listed as "DS=2,488,479" Any idea what that amount represents? how it was derived?
thx
https://www.sec.gov/Archives/edgar/data/886128/000114420419009210/tv514228_ex10-3.htm
Max, I'm hoping you can help me with an issue that that has some relation to your posted link to FCEL Tute Investors. If you would please go to that link and scroll down about a 1/4 of the way down pg 1 you will see CVI Holdings listed (hi-lited in green .. =new position ..?)
Now moving on from that.
Note that at the very beginning of the "Waiver and Voluntary Reduction" (link provided) CVI Investments Inc is named as the "sole holder of Series C Preferred Stock of the Company"
link https://www.sec.gov/Archives/edgar/data/886128/000114420419009210/tv514228_ex10-1.htm
Furthermore this 13F filing (signature date of 5-15-2019) discloses CVI Holdings and CVI Investments to be one in the same. https://www.sec.gov/Archives/edgar/data/1728194/000172819419000002/xslForm13F_X01/primary_doc.xml
Now (I'm sure you're asking) what is the point? If you scroll further down in the "Waiver and Voluntary Reduction" (link provided above) to the bottom of pg 3 you will read: "Solely with respect to the initial conversion of Preferred Shares immediately after the date of this Agreement, which relates, in part, to the Conversion Notice originally provided by the Holder on January 25, 2019 (the “Initial Conversion”):"
I am unable to find anything on a "conversion notice" having been filed or submitted on Jan 25, 2019. But assuming accuracy of this how can CVI still report such ownership? An amount of ownership which by the way is oddly close to the initial amount of series C PS issued.
Also if you're interested, take a close look at the 1st paragraph of pg 4 (of the Waiver and Voluntary Reduction writing) You cant help but infer that it was written with advanced knowledge of RS (and more importantly need for pps>=$1.00 for ten business days) Why else would they pick the "eleventh (11th) trading day"
If you have time and can understand my ramblings I would appreciate your insights. Thx
Jack, I think you already know FCEL could and likely would file a request for extension if that should happen. If memory serves if granted, they go from NASDAQ Capital Mkt to NASDAQ Global (or vice versa .. but something like that) for 180 days. Oh and their request for extension would have to include a CONVINCING plan as to how they will re-achieve $1.00/sh. Now granted in most cases this "plan" includes a RS ... so there is that (spent bullet). I only bring this matter up for the sake of accuracy, not as an argument against your post.
Where (or to whom) did The 54M shares of CS issued between March 4, 2019 (at which time OS was ~129M) and May 8, 2019 (at which time OS was ~183M) go to?? It seems to me it would have to have gone towards further conversion(s) of C & D PS. If not they would have been in violation of the "guaranteed reserve holdings of CS" provided in the 2/21/2019 Waiver Agreement.
You are correct about the 10 consecutive day thing, something I've never researched about that though is whether that is 10 "business" days or not. The C & D payoff thing is also confusing.
My take on it all is: Holders agreed to No more $1M/Bi-monthly pmnts (each time I read the waivers/agreement updates I change my mind on this issue tho ... lol)
Cannot demand cash pmnts
Pmnts can be deferred till maturity date
In exchange they got: 25% increase in PS conversion to CS, guaranteed CS reserve holding, Maximum pps of $.37 for future calculations in determining conversion.
The thought of a RS is of little concern to me. The negative connotation associated to it is the only detriment IMO. I mean if I have ten $1 bills do I really care if I get one $10 bill in exchange? No
Dodging that Hercules loan covenant bullet would be huge. Now factor in the superior debt arrangements / the elimination of FCELC and FCELD PS anchors & the irons FCEL has in the fire .... it's a story with very positive implications at the least. Note that if you look at the last 10Q I think it's like $17.5M loss reported due to series C & D alone. (just an fyi). If May 28th comes and goes with no RS announcement it says FCEL has provided SEC with an acceptable plan to achieve $1.00/sh. in near (180 day) future. Granted they may have to list in nasdaq global vs capital for a while. It's interesting for sure!! good luck
The covenant(s) of Hercules loan included A. Unrestricted cash reserves => the combined totals of 1) 75% of outstanding loan amount .. loan amount stood at $25.5M 2) 75% of any Invoiced accounts payable which were beyond net90. This portion of the covenant was to take effect Mar 31, 2019.
FCEL bought some time (30 days) with the recent amendment (see the 8K dated 4/3/2019).
So by the 3rd day following the covenant requirements, FCEL responded and addressed them to Hercules satisfaction. Given that one must assume the covenants were met by April 30, 2019 else we would have seen new SEC filings again on the 3rd of May.
According to most recent 10Q FCEL's OS was 129.5M as of Mar 4, 2019. NASDAQ.com now shows OS at 158M. (link below)
FCELC series conversion?, FCEL dipping into ATM ?. The bi-monthly installment payments on FCELD were deferred until maturity date (although I guess that could be at FCEL's discretion)
I'll even throw out the possibility that Hercules accepted some shares in lieu of payment / covenant reqmnt.?
https://www.nasdaq.com/symbol/fcel/stock-report
Quite the contrary regarding your assessment of my opinion(s). I'm actually glad to see that someone else concurs with my gut feelings that the 6M CS for series A warrants deal was done mostly as an appeasement. I sure as heck couldn't find any other logical explanation.
As to the "washing out of the Preferred" - I don't mind that FCEL is trying to get out of an absolutely horrendous financial arrangement. I'm far from anything even close to being an expert yet even I could see the series C PS deal was bad. Then they went and doubled down on it with an even worse series D PS deal. Yet God forbid there should be any ramifications to upper mngmnt for their ignorance. I'll chime back in again later, thanks for the sanity check confirmation.
Wait... What? I win so I get to do more research to try to answer more questions? Well ok I guess that sounds fair ... lol. I'll look into that you in turn look into this. Why did FCEL agree to issue 6M shares of CS on Feb 21, 2019 in exchange for the series A warrants?
Ref:
Pg 2 "Exchange Agreement"
https://www.sec.gov/Archives/edgar/data/886128/000114420419009210/tv514228_8k.htm
Original Transaction Ref:
https://www.sec.gov/Archives/edgar/data/886128/000119312516646413/d215089d8k.htm
lightrock, you said you wouldn't believe me until I could demonstrate the separate delisting notifications. I'm just stubborn enough to oblige you.
BLPH
Failure to meet $1.00/sh notice 2/27/2019
https://www.sec.gov/Archives/edgar/data/1600132/000160013219000047/a8-kfebruary2019nasdaq.htm
Failure to meet $50M Min Mkt Value of Securities 3/7/2019
https://www.sec.gov/Archives/edgar/data/1600132/000160013219000049/a8-kmarch2019nasdaq.htm
Zactly what I see too 44cent, IDK who the CFO is at FCEL or if not him (or her) who came up with this C & D PS financing strategy. What I do know is my wife could've done better job (and she's known for saying to me "what do you mean we don't have any money? I still have checks left !"
krays & Max,
I think those original "triggering events" requirements on C & D PS went out the window when the waiver / exchange deal(s) and modifications were signed off on 2/21/2019. Even if they weren't, FCEL will (post 1:10 or 1:12 RS) have sufficient shelf to meet the 150% reqmnt. It is odd that Proposal 5 for authorization of AS increase had different voting requirement structure. ?? What really pisses me off is the est. $11.5M/yr savings from 135 workers layed off. .... Get rid of 4 or 5 big shots that bring nothing to the party and keep the workers, still prolly save $2M/yr.
Here is an example of letter you get (similar to notification of delisting due to non-compliance of $1.00/sh reqmnt) but this one is due to non compliance of $50M Min Mkt Cap reqmnt. I'm telling you for real - it's treated separately This is a letter to an unrelated company, I'm providing the link for example purpose only
https://www.sec.gov/Archives/edgar/data/65770/000119312513087834/d493563d8k.htm
lightrock, you are overlooking one important aspect of maintaining their listing and you are reading something into the notification letter that isn't there.
1st) Not only do they need to get pps back to >=$1.00/sh but they must maintain pps>=$1.00/sh for 10 consecutive days prior to May 28th.
2nd) They have not been put on notice for deficiency of mkt cap (being below $50M) now that's not to say the clock isnt ticking for said notification to be issued but as of today no notification has been issued. If and when that notice is issued they will have 180 days to remedy.
As far as your pointing out the inclusion of the word "and" in the $1.00/sh non-compliance letter. Yes it takes two steps to obtain an additional 180 day extension both of which are communicated via the application for extension process.
Correct. Also some info which better illustrates the effect RS will have on AS and OS with and without the increase of AS ican be found on pg 58 of proxy (link below) Note:the OS listed in the proxy subsequently increased from 108.4M to 129.5M (as of Mar 4, 2019) The reserve requirements would be affected in an equal but opposite way.
https://www.sec.gov/Archives/edgar/data/886128/000114420419005455/tv511691_pre14a.htm#a_052
I'm guessing you are already aware of the info regarding Greenbank/FCEL/Bridgeport financing. If accurate expect a PR Mon/Tues. Likely followed up by a RS announcement. see pgs 7/8
https://www.ctgreenbank.com/wp-content/uploads/2019/04/CGB_BOD_Draft_Meeting-Minutes_032919.pdf
yes they do have that option... "If the Company is unable to demonstrate compliance with Rule 5450(a)(1) by May 28, 2019, the Company can submit an application to transfer its securities to The Nasdaq Capital Market and request an additional 180 day period to regain compliance with the minimum bid price requirement."
https://www.sec.gov/Archives/edgar/data/886128/000114420418063138/tv508375_8k.htm
Max & krays,
Looking back for info on the "threshold" of vote requirement on approving the increase in AS. Here is the explanation for why it failed to pass. (Taken from pg 56 VOTE REQUIRED - for proposal 5 See link below) "Approval of this Proposal 5 (otherwise referred to as the Increase Authorized Shares Proposal) requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding as of the record date for the Annual Meeting. This proposal is a “non-routine” matter under NYSE Rule 452 on which brokers may not vote without instruction from beneficial owners. Abstentions and broker non-votes will have the effect of a vote “AGAINST” this proposal"
https://www.sec.gov/Archives/edgar/data/886128/000114420419008914/tv512731-1coldef14a.htm#t50PR