Boston, MA 03/20/2014 (wallstreetpr) – American Eagle Energy Corp (NYSEMKT:AMZG) issued price for its underwritten common stock offering. The company also went on to say what it wants to do with the proceeds resulting from the offering. But the news about the share dilution did not go down well with investors who reacted by sending the stock down in the last session.
The company announced that its public offering of 11 million common stock shares will come with an option for the underwriters to purchase additional 1.65 million shares. And that option is granted a window of opportunity of 30 days. Each share in the offering has been priced at $6.60. The share offering comes on the back of a recent reverse stock split announced March 10, in which shareholders received 1-for-4 in the stock consolidation arrangement.
Shares fall in ahead of dilution
Secondary offering of stock is never good news for existing shareholders, because it leads to dilution of their value. As if to show their displeasure with the upcoming share dilution, investors sent shares of American Eagle Energy Corp (NYSEMKT:AMZG) hurting down 6.11 percent to $6.61, during the Wednesday session. Interestingly, the Wednesday session saw the stock soar to establish a new 52-week high at $6.80.
Looking at the current share prices, it is clear that the shares have had a decent jump in the past year, emerging from the lows of $1.60, to currently trade in the range of $6.60.
Way forward with the offering
American Eagle Energy Corp (NYSEMKT:AMZG) hopes to utilize the proceeds resulting from the offering for acquisition of stake in some of its existing joint ventures. The company also has its eyes set on using the funds to partially fund its current capital budget. And if the funds are enough, a portion of it will be used in other corporate purposes.
Takeaway
American Eagle Energy Corp (NYSEMKT:AMZG) is an independently company involved in exploration and production of oil and gas. The company has attained significant growth in the past year, thereby lifting the stock through increased production and acreage acquisition. The company boasts a highly experienced management which is the reason it has been able to perform better even when most of its peers are facing challenges from all directions.
