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Raser Technologies Inc. has reached a deal to sell to institutional investors shares and warrants that would give them control of about 13 percent of the company's common stock.
Wall Street apparently disliked the announcement, made early Tuesday. Raser's stock price plummeted at the opening bell and closed down $1.05, or 27 percent, to end the day at $2.80 a share.
Raser did not say who the institutional investors are.
"It's not something that we are releasing right now," Issa Arnita, director of investor relations for the Provo-based alternate-energy technology company, said Tuesday.
The investors will buy 8.5 million shares and warrants for another 4.2 million shares for $25.5 million. Arnita said the transaction is expected to close Monday.
It's unclear why the institutional investors want to buy the stock and warrants. None of the investors agreed to buy enough shares to trigger a disclosure requirement by the Securities and Exchange Commission.
"They would have to declare their intentions. However, no single institutional investor bought more than 5 percent of our stock in this deal," Arnita said.
The shares will be purchased at a 22½ percent discount to the stock's $3.85 closing price on Monday.
The warrants can be exercised any time in the next five years at $4.62 a share.
After deducting transaction expenses, Raser expects to net roughly $23.8 million. Arnita said the proceeds will help offset expenses related to a couple of geothermal power projects the company hopes to build near Milford.
Earlier this week, Raser said it reached a preliminary agreement to build a 110-megawatt geothermal plant at the Beaver County site and sell the electricity to the Southern California Power Authority.
The project will cost roughly $525 million, if it's constructed. The authority would provide $400 million toward the construction and Raser would have to come up with the balance.
Raser, which employs about 60 people, also wants to construct a 42-megawatt project at the geothermal site. That project would cost $190 million if it, too, were built. The company has applied for a Department of Energy loan that would cover 80 percent of the cost, Arnita said.