PureCycle Technologies Inc. (Nasdaq: PCT) saw its stock price fall sharply on Thursday, declining roughly 16.4% after the company announced a substantial $395 million capital raise that includes both equity and debt components. The move has raised significant concerns among investors about dilution and potential future conversion risks.
The stock was trading at $8.27, down $1.62 from the previous close, with volume surging to over 16.9 million shares, according to market data. The selloff came as the company priced a combined offering of 17.66 million shares of common stock at $8.21 each, along with $250 million in 4.75% convertible senior notes due in 2032.
Details of the Offering
PureCycle said it expects to raise gross proceeds of $395 million from the two offerings. The equity component adds nearly 17.7 million new shares to the market, before any greenshoe option. Underwriters have been granted a 30-day window to purchase up to an additional $37.5 million in notes and up to 2.28 million extra shares.
The company plans to use approximately $246.3 million of the net proceeds to repurchase about $216 million principal amount of its existing 7.25% green convertible notes due 2030. The remainder will be used for additional repurchases, working capital, and general corporate purposes.
Convertible Notes Terms
The new 2032 notes carry a 4.75% annual coupon, with interest payments starting January 1, 2027, and maturing on July 1, 2032. The initial conversion price is set at approximately $11.08, representing a 35% premium over the $8.21 stock offering price. This conversion feature adds further dilution risk for existing shareholders if the stock price appreciates.
PureCycle disclosed in a June 10 SEC filing that it amended its revolving credit agreement to facilitate the offerings. The credit facility allows for up to $200 million in borrowings, and Sylebra-affiliated lenders are listed as beneficial owners of more than 5% of the company's shares.
Recent Performance and Outlook
The capital restructuring comes just over a month after PureCycle reported its first-quarter results. The company achieved record production of 8.4 million pounds of recycled polypropylene, with revenue rising for the fifth consecutive quarter. Liquidity stood at $131 million at quarter-end, while the net loss was $33.4 million and adjusted EBITDA was negative $30.9 million.
Earlier this week, PureCycle announced a partnership with Innovia Films to develop and test white cavitated BOPP film using its PureFive Choice recycled polypropylene, which contains over 40% post-consumer recycled content. However, the financing news overshadowed this operational milestone.
Investors are now focused on the closing of the offerings, expected around June 15, 2026, and whether underwriters will exercise their over-allotment options. The stock's sharp decline reflects the market's concern that the new shares and future conversion risk could pressure the stock further in the near term.
