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Advanced Battery Tumbles on Stock Sale

NEW YORK ( TheStreet) -- Shares of Advanced Battery Technologies (ABAT) fell Tuesday on news the Chinese maker of rechargeable polymer lithium-ion batteries plans to raise $30 million in fresh capital through a dilutive stock sale.

The company said it's selling 7.5 million common shares at $4 each through a direct private placement with several undisclosed institutional investors. The deal also includes warrants for the purchase of an additional 3.75 million common shares at the same price, pushing the potential gross proceeds up another $15 million.

The $4 per share price represented a 7% discount to the stock's closing price of $4.28 on Monday; although it's in line with the stock's 50-day moving average and 11% above its 200-day moving average of $3.60.

That didn't stop the sellers on Tuesday, however, as the stock tumbled 49 cents, or 11.5%, to $3.79. Volume of 7.98 million was roughly eight times the issue's trailing three-month daily average of 960,447. Year-to-date, the shares have risen about 7% with an even greater bounce off a 52-week low of $3.02 set back in early May.

Advanced Battery expects the stock sale to close on Dec. 3. It plans to use the proceeds for the expansion of its manufacturing facility and for acquisitions.

New York-based Olympia Capital Markets Group was on board with the company using this fresh capital to make a deal. Analyst Paul Resnik has a buy rating on the stock with a 12-month price target of $7.

"This capital raise strengthens our conviction that the company will seek to make a significant and, in our opinion most likely, accretive acquisition in the near term," Resnik wrote in a research note. He trimmed his 2010 earnings estimate for Advanced Battery by a penny to 52 cents a share, and maintained his view for a profit of 60 cents a share in 2011.

The stock sale follows a strong earnings report for Advanced Battery earlier this month. On Nov. 15, the company said it posted a profit of $11.1 million, or 16 cents a share, for the three months ended Sept. 30 with revenue soaring more than 45% year-over-year to $25.9 million.

It's been a rough week so far for the battery technology companies. Shares of A123 Systems (AONE) tumbled 9% on Monday following a downgrade by Wunderlich Securities, and lost another 2.4% on Tuesday. Meantime, China BAK Battery (CBAK - Get Report) shares sank on Tuesday after the company reported a widening loss for the fourth quarter and said its CFO had resigned.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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