Fairmount Santrol Holdings Inc (NYSE:FMSA) has revealed on Wednesday the commencement of 25 million shares in underwritten public offering, which is in pursuant to an effective shelf registration filing to the Securities and Exchange Commission (SEC). Subject to regulations, the underwritten public offering is expected to expire on Tuesday.
Underwritten Public Offering
The underwriters can acquire up to 3.75 million additional shares within a 30-day option. They can offer their respective shares in various transactions in the over-the-counter OTC market and on the New York Stock Exchange (NYSE).
The company is expecting the total proceeds from the underwritten public offering to come in at about $148.75 million. This estimate, however, does not yet constitute the applicable underwriting commissions and other resulting expenses.
Fairmount Santrol Holdings has Barclays Capital, Inc., Morgan Stanley & Co. LLC, and Wells Fargo Securities, LLC on board to serve as joint book-running managers.
Purpose of the Proceeds
Fairmount Santrol Holdings will use the proceeds from the underwritten public offering for corporate expenses, which may include capital expenses, debt redemption, debt refinancing, debt repayment, joint venture investments, leases, loan investments, working capital, and other potential obligations.
2Q Financial Results
Last week, Fairmount Santrol Holdings has released an initial report for the second quarter. Full results are expected to be issued by August 4.
According to the company’s report, revenues for the period are expected to come in at around $113 million to $115 million. This shows a significant decline from the previous quarter, during which the company had a total revenue of $145.50 million. Year-over-year, the projected revenue for the second quarter are down by almost half from $221.30 million.
Moreover, Fairmount Santrol Holdings anticipates a total net loss of about $91 million to $93 million for the period. This is nine times greater than the previous quarter’s $11.80 million worth of net losses.
The significant losses are largely attributed to the Proppant Solutions segment, which is affected by the heightened pressure on proppant volumes. Nonetheless, the Industrial and Recreational segments are expected to post upbeat volumes, countering the declines of the aforementioned segment.