ESS Inc. is planning to issue new shares in a move that could take advantage of a well-performing stock to capture some of the cash the company missed out on when its SPAC merger fell short of forecasts.
In a securities filing this week, the Wilsonville grid-scale battery maker said it planned to sell 5 million shares, with the offering’s underwriters given the option of purchasing 1.5 million additional shares.
ESS was trading around $12 on Thursday, down from about $14 when it revealed its plans on Monday.
At the current price, a sale of 6.5 million shares would translate into a $75 million-plus cash infusion before expenses.
The Securities and Exchange Commission needs to declare ESS’ registration of the new securities effective before the shares can be sold.
ESS makes a unique iron-based flow battery that it bills as a better alternative to lithium-ion batteries for long-duration grid energy storage, which experts see as vital to greening the grid. The company is spending heavily to build out production capacity in a rapid move to commercialize after a decade of research and development.
ESS went public in early October through a SPAC merger that in a best-case scenario would have raised $465 million before expenses. Its haul shrunk to $246 million after expenses after most of its SPAC-partner shareholders redeemed their shares before the merger closed.
ESS said then that the IPO would still leave it sufficient funds to pursue major objectives, which it listed as manufacturing expansion, expanded sales footprint, launching its Energy Center product and R&D. But it added that “more cash would certainly increase balance sheet strength.”
A solid stock performance, up about 40% from its opening price, puts it in position to address that.
The company did not respond to a request for comment on the new offering. In the filing, it said it would use the proceeds “for our expansion plans and general corporate purposes.”
The filing includes the separate offering of 5 million shares of outstanding ESS stock owned by SB Energy Global Holdings One Ltd. The Softbank Group subsidiary holds nearly 36 million ESS shares, 23.7% of the outstanding shares, making it ESS’ largest shareholder.
Proceeds from that sale would go to SB Energy.
“Its sale associated with this offering is designed to lower its total economic ownership in ESS below 20% and align with SBE’s existing 19.9% limitation on voting,” ESS said in the filing.
SB Energy is a renewable energy developer that has a “framework agreement” to buy 2 million gigawatt-hours of batteries from ESS over the next five years. ESS put the potential value of the deal at $300 million while noting it does not commit SB Energy to any firm orders.
