SFL Corp shares plunged on the New York Stock Exchange on Wednesday morning, leading laggards in a downward mark for shipping stocks after it raised new cash in a secondary offering.
The John Fredriksen-backed Norwegian company’s shares were down 13.3% in late morning trading at $12.09.
That puts the shares below the price paid by investors in a secondary offering announced the day before.
As TradeWinds reported, the sale of 8m common shares was priced at $12.50 per share, below Tuesday’s closing price of $13.95.
SFL, a financial lessor controlled by Fredriksen that holds a diversified fleet, raised $100m that it said it could spend on acquisitions.
Underwriters have 30 days to snap up an additional 1.2m shares, bringing the potential gross proceeds to $115m. Investment banks Morgan Stanley and BTIG were involved in the deal.
Share price plunges are common in a secondary offering, because investors often see them as dilutive to existing shareholders.
Analyst Gregory Lewis told TradeWinds that raising money and deploying it to acquire assets is consistent with the SFL playbook: “This is what this company’s been doing for 15 years.”
He said the Ole Hjertaker-led shipowner typically “levers up” with 80% debt with any acquisition, so raising $100m translates into $500m in financial firepower.
The share offering is the company’s second deal on financial markets this year, following a $150m bond placement in April.
SFL could not be immediately reached for comment on how it intends to deploy the new cash.
But Lewis said the company does not necessarily have a specific acquisition in hand with such financial deals.
It has made three acquisitions in 2024 by ordering five container ships, purchasing two chemical tankers and striking a resale deal for three LR2 product tanker newbuildings.
Most other shipping shares were also in negative territory on Wednesday morning, following downward momentum in broader US stock markets.
The Dow Jones US Marine Transportation Index has slipped 1.7% so far in the day, to hit $405.06 in late-morning trading.
