Shares of Plug Power (NASDAQ: PLUG) plummeted 17.76% in pre-market trading on Wednesday following the company's announcement of a $375 million convertible senior notes offering. The hydrogen fuel cell maker's move to raise capital has sparked concerns among investors about potential share dilution and the company's ongoing financial needs.

Plug Power priced the convertible senior notes due 2033 at 95% of the principal amount, with a 6.75% interest rate. The company also granted initial purchasers a 13-day option to buy up to an additional $56.25 million in notes. Plug Power intends to use approximately $245.6 million of the net proceeds to fully repay its outstanding 15% secured debentures and related fees. The remaining funds will be allocated to repurchase a portion of its existing 7% convertible senior notes due 2026 and for general corporate purposes.

The sharp decline in Plug Power's stock price reflects investors' wariness about the company's financial strategy and its implications for long-term value creation. This capital raise comes at a time when Plug Power has been focusing on streamlining operations and enhancing cash efficiency through its recently announced Project Quantum Leap initiative. However, the market reaction suggests that concerns persist about the company's path to profitability and its ongoing capital requirements in the competitive hydrogen solutions market.