Plug Power is finalizing a $1.6bn loan facility with the Department of Energy’s Loan Programs Office, CEO Andy Marsh said on an investor update call today.
The New York-based company, which is facing a cash crunch, is in the term sheet phase for the loan facility, Marsh noted, which would help shore up its liquidity in the near term.
Marsh also announced that Plug’s Georgia facility is now operational, making it the largest PEM-based green hydrogen facility in operations in North America.
Last year Plug was on the hunt for a loan facility with Goldman Sachs as advisor, as reported by ReSource.
CFO Paul Middleton said the company has received offers for debt but not on terms that are acceptable to the company. For comparison, under the DOE loan structure, the interest rate on the loan facility will not go higher than 6.5%, the executives said.
Its cash management strategy, Middleton added, will focus on utilizing at-the-market (ATM) share offerings, reducing capex and increasing margins, including through raising product prices, and securing the DOE facility.
In particular, Plug is focused on solving the ‘going concern’ issue with auditors by the time it files its year-end 10K filing with the Securities and Exchange Commission, including through the use of a $1bn share offering program. An ATM program allows the issuing company to raise capital through share offerings as needed.
The company has also slowed investments into projects in Texas and New York until it finds a better financing solution, the CFO said. And the achievement of operations at the Georgia facility and the expected 2024 commercial operations date for the Tennessee facility will improve efficiencies.
Overall, Plug is seeking to reduce its cash burn by 70% in 2024 compared to 2023, and is targeting positive free cash flow in the next 12 months, according to Middleton.
The company’s equity has taken a beating in recent months, but is trading up by over 20% in pre-market trading to $3.44 per share.
