A secondary share offering was the catalyst behind this Granite Ridge Springs (NYSE: GRNT) ended up in a dry place this week. After pricing the sale of 7.1 million shares on Tuesday, the oil and gas company’s shares lost more than 23% of their market value, according to data compiled by S&P Global Market Intelligence.
Granite announced that funds managed by Gray Rock Energy Management are selling those shares in an underwritten secondary offering. In addition to the 7.1 million shares of common stock on the table, the underwriters of the offering were granted a 30-day option to purchase an additional total of nearly 1.07 million shares.
The issue cost $5 per share; the negative reaction from investors was due to the fact that this was well below the closing price of $6 plus the closing price of Granite Ridge shares on Monday.
The underwriting syndicate was led by bank of America Effects, Capital One Effects, Evercore ISI and Stephens. The offering was expected to close on Friday.
It was not immediately clear why the selling shareholders sold their shares. Granite Ridge emphasizes that it will not receive any proceeds from the issue, as the energy company is not the selling party.
The two listed sellers, the GREP Holdco III-A and GREP Holdco III-B Holdings funds, are selling only a small portion of their positions. Currently, the pair together own just over 47% of Granite Ridge’s outstanding common stock; that will drop to at least 41% after the sale, depending on how many shares the underwriters buy with their option.
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