ImmuCell Corp. announced Wednesday that it plans to offer for sale an additional $9 million worth of shares, equivalent to nearly 30 percent of the company’s current market capitalization.

The Portland-based maker of animal health products for the dairy and beef industries said it needs the money to expand production of its flagship product, First Defense, for which it has struggled in the past to keep up with customer orders.

The sale of shares is bad news for current investors because it would significantly dilute the value of their existing shares. The price of existing ImmuCell shares fell by about $1, or 15 percent, following the announcement. ImmuCell’s share price was $6.86 when the market closed on Tuesday, but it had dropped to $5.85 as of 10 a.m. Wednesday.

The follow-on public offering would include over 1.6 million company-owned shares priced at $5.50 each, for a total of about $9 million. That’s nearly 30 percent of the company’s market capitalization of about $32.5 million. Market capitalization is the total number of outstanding shares multiplied by the value of each share.

The company said in a news release that it intends to use a portion of the offering’s proceeds to expand production capacity for First Defense, a natural product that prevents scours, or diarrhea, in newborn calves.

A production bottleneck that caused a backlog of customer orders to accrue affected the company’s bottom line in the first quarter of 2018, but President and CEO Michael Brigham said it did not contribute to ImmuCell experiencing a $2.3 million net loss for the year.

ImmuCell said it is “increasingly likely” that it also will use a portion of the offering’s proceeds for expanded facilities to manufacture a new product called Re-Tain that has been submitted to the U.S. Food and Drug Administration for approval. In November 2017, ImmuCell completed construction of a new $20 million manufacturing facility to produce Re-Tain, a natural alternative to antibiotics for treating mastitis, a disease that afflicts lactating dairy cows.

Any remaining proceeds from the offering would be used to reduce the company’s debt or for working capital, it said. ImmuCell said the offering is expected to close on or about March 29.

This story was updated at 11 a.m. March 28 to clarify the impact of the company’s production bottleneck on its 2018 finances. 

Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: