ONE Gas (OGS) shares plummeted 5.03% in intraday trading on Friday, following the company's announcement of a $198 million equity offering. The natural gas utility priced 2.5 million shares at $79 each, representing a 0.9% discount to the stock's last closing price.
The offering, which is expected to close on May 12, was conducted through a forward sale agreement with JPMorgan Chase Bank. ONE Gas plans to use the net proceeds for general corporate purposes, including debt repayment, refinancing, and funding construction and acquisition expenditures. While this move provides the company with additional capital, it has led to immediate pressure on the stock price due to potential dilution concerns.
Despite the current drop, ONE Gas has shown strong performance year-to-date, with shares up 15% before this offering. The company's forward sale agreement strategy allows it to lock in current prices while delaying the issuance of new shares, potentially mitigating long-term dilution effects. However, investors appear to be reacting negatively to the short-term impact of the equity offering on the stock's value.
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