GREENWOOD VILLAGE, Colo. - Arq, Inc. (NASDAQ: ARQ), a North American producer of activated carbon and environmental technology products with a market capitalization of $318 million, has finalized an asset-based revolving credit facility with MidCap Financial. The $30 million facility is intended to refinance existing debt, support capital expenditures at the Red River plant, and meet working capital needs for corporate growth initiatives.
The company's CEO, Bob Rasmus, stated that the new financial arrangement would enhance Arq's financial flexibility and reduce capital costs, reflecting the progress the company has made since its acquisition in 2023. According to InvestingPro data, Arq has demonstrated strong momentum with a 165% return over the past year and maintains a healthy current ratio of 2.89. The facility terms allow Arq to draw funds based on a borrowing base tied to 85% of eligible accounts receivable and inventory values, with an interest rate pegged to the Adjusted Term SOFR plus 4.50%, and a SOFR floor of 2.5%.
MidCap Financial, managed by Apollo Capital Management, provides senior debt solutions to mid-market firms and oversees more than $53 billion in commitments. This partnership with Arq is seen as a strategic move to support Arq's expansion plans, particularly at the Red River plant. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, with revenue growing at 16.44% year-over-year.
Arq specializes in products that aim to reduce environmental impact by removing pollutants from water, land, and air. The company prides itself on being the only vertically integrated activated carbon producer in North America.
The details of the credit facility have been disclosed in Arq's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission. This move is expected to provide the company with the necessary capital to pursue strategic growth investments and maintain its operations effectively.
This announcement contains forward-looking statements regarding anticipated uses of the credit facility and the expected financial flexibility it will provide. These statements are subject to risks and uncertainties, and actual results may differ from those projected. For deeper insights into Arq's financial health and growth potential, InvestingPro subscribers have access to over 10 additional ProTips and comprehensive financial metrics.
Information from this article is based on a press release statement from Arq, Inc.
In other recent news, Arq Inc. received a Buy rating from Canaccord Genuity, recognizing the company's potential in the burgeoning granular activated carbon (GAC) market. This rating comes as Arq transitions from powdered activated carbon (PAC) to GAC, a shift expected to result in higher average selling prices and profit margins. Canaccord Genuity, however, also pointed out potential risks, including the successful execution of the GAC transition and potential regulatory changes.
In addition to the analyst's coverage, Arq announced the pricing for its public offering of 4,770,000 shares at $5.25 each, aiming to raise approximately $25 million. The funds are set to be used for various corporate purposes, including working capital, capital expenditures, research and development, debt servicing, and potential acquisitions or investments.
In other recent developments, Arq approved its 2024 Omnibus Incentive Plan, which allows for the issuance of up to 2.5 million shares of common stock. The company also secured $15 million in new equity financing through a private investment in public equity transaction. These recent developments are part of Arq's strategic steps to position itself within the growing activated carbon market.
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