Shares of Eos Energy Enterprises, Inc. (NASDAQ:EOSE) dropped 17% following the company’s announcement of plans to raise substantial capital through two separate offerings—a $175 million convertible senior notes issuance and a proposed $75 million common stock offering.
The energy storage firm explained that the funds raised would support a range of strategic initiatives, including the repurchase of its outstanding 5%/6% Convertible Senior PIK Toggle Notes due in 2026, partial prepayment of its existing credit facility, and other general corporate needs. Eos highlighted that a $50 million prepayment toward the credit agreement could reduce its PIK interest rate from 15% to 7%, and secure a waiver on financial covenants until 2027.
Despite these potential financial improvements, investors expressed concern over the dilution risk associated with the equity component of the capital raise. The common stock offering remains subject to market conditions, and no assurances were given regarding its final size or completion. The company also granted underwriters a 30-day option to purchase additional shares, which could further increase share count if exercised.
Adding another layer to the funding strategy, Eos separately revealed its intention to issue convertible senior notes due in 2030 through a private placement aimed at qualified institutional investors. This offering could generate an additional $175 million, with the possibility for initial purchasers to acquire up to $26.25 million more in notes. The two offerings are being handled independently and are not contingent upon one another.
The market’s reaction reflects investor apprehension over potential dilution and the complexities involved in the dual financing approach, even as Eos positions itself for long-term financial flexibility.