By midmorning, shares had tumbled 8.3% to $12.01.
The San Francisco-based business said it intends to offer $100 million in convertible senior subordinated notes due 2019 as well as 5 million shares of its common stock in a separate offering.
Underwriters of the offering of senior notes will also be granted a 30-day option to purchase up to an additional $15 million in notes. The notes will be convertible into common stock at the then-applicable conversion rate prior to their maturity.
Underwriters of the common stock offering will have a 30-day option to purchase up to an additional 750,000 shares.
Solazyme said in a statement that it will use net proceeds "to fund capital expenditures, working capital and general corporate purposes."
Goldman Sachs will act as underwriter for the senior notes offering. Goldman Sachs and Morgan Stanley will act as dual book-running managers for the stock offering.
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TheStreet Ratings team rates SOLAZYME INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOLAZYME INC (SZYM) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 35.5% when compared to the same quarter one year ago, falling from -$24.61 million to -$33.34 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOLAZYME INC's return on equity significantly trails that of both the industry average and the S&P 500.
- SOLAZYME INC's earnings per share declined by 22.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SOLAZYME INC reported poor results of -$1.81 versus -$1.37 in the prior year. This year, the market expects an improvement in earnings (-$1.49 versus -$1.81).
- SZYM's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
- Compared to its closing price of one year ago, SZYM's share price has jumped by 69.38%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in SZYM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: SZYM Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.