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November 4, 2024

Despite some pushback, FuelCell shareholders approve reverse stock split

Contributed Danbury-based FuelCell Energy's new 14-megawatt fuel cell park in Derby.
By Andrew Larson

FuelCell Energy shareholders handily approved a reverse stock split proposed by the Danbury-based company’s board of directors last week, despite backlash and an opposition campaign from an investor.

On Oct. 31, shareholders voted in favor of the reverse stock split by nearly a 7:3 margin during a special meeting of stockholders.

About 65.8% of votes were in favor of the reverse stock split; 33.4% voted against it. Less than 1% abstained.

About 47% of the voting power of the company’s common stock participated in the vote.

FuelCell reported the results in a proxy statement Friday.

A group of investors opposed the reserve stock split.

Stockholder Steve Roach, a fintech entrepreneur, said the company’s board “has committed the company to a business plan that has resulted in massive stockholder dilution and ever-increasing losses.”

“In recent years, FuelCell Energy’s stock has experienced a steep and prolonged decline, wiping out substantial shareholder value,” Roach wrote in an opinion piece published by the Hartford Business Journal. 

“Once considered a hot stock in the green energy sector, shares have plunged as much as 97% from their peak levels,” Roach continued. “Investors who believed in the company’s potential to transform the energy landscape are now sitting on significant losses.”

FuelCell’s board urged shareholders to support the proposal, saying that it will allow the company to regain compliance with a Nasdaq listing rule that requires a minimum bid price of $1 per share for continued listing. 

The reverse stock split ratio will be determined by the company’s board before May 23, 2025. The ratio will range from one-for-10 shares to one-for-30 shares.

Reverse stock splits increase a stock price by consolidating the number of existing shares into fewer, higher-priced shares.

In a one-for-10 reverse stock split, stockholders would receive one share for every 10 they own, but the total value of their holdings would remain unchanged.

FuelCell reported a $35.1 million loss during its third-quarter conference call in September, an increase from its $23.6 million loss in the third quarter of 2023.

In the 2023 fiscal year, FuelCell suffered a net loss of $108 million.

As of Monday morning, FuelCell shares were trading at 40 cents.

FuelCell has previously said that it is taking “proactive steps” to keep its finances strong while also focusing on its efforts to capitalize on the “energy transition and the growing distributed power generation opportunity.”

On Friday, the day after the vote, FuelCell announced that it had closed on $9.4 million in debt financing with the Export-Import Bank of the United States for fuel cell projects in South Korea.

South Korean-based Gyeonggi Green Energy has agreed to purchase 42 upgraded 1.4-megawatt fuel cells from FuelCell to replace existing modules at the Hwaseong Baran Industrial Complex, home to the world’s largest fuel cell power platform.

FuelCell has until the end of November to get its stock price above $1 to prevent delisting.


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