Albemarle Shares Plunge Nearly 18% as the Lithium Giant Offers New Stock

Company was biggest S&P decliner Tuesday

By
Bill McColl
Bill McColl
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Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time.

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Published March 05, 2024
The Albermarle Corp. lithium processing facility in Antofagasta, Chile.
The Albermarle Corp. lithium processing facility in Antofagasta, Chile.

Cristobal Olivares / Bloomberg / Getty Images

Key Takeaways

  • Albemarle shares plunged as the world's biggest lithium producer offered new stock to pay for capital expenditures or debt reduction.
  • The new depositary shares represent 1/20th interest per share of its preferred stock.
  • Albemarle had already announced it was cutting costs as its revenue slipped because of sinking lithium prices.

Albemarle (ALB) was the worst-performing stock in the S&P 500 Tuesday, falling nearly 18%, after the world’s biggest lithium producer announced it would be selling as much as $2.01 billion in new stock to finance capital projects or lower its debt.

The company said it had begun offering $1.75 billion of depositary shares, each representing a 1/20th interest in a share of its Series A Mandatory Convertible Preferred Stock. In addition, Albemarle expects to offer underwriters a 30-day option to buy up to another $262.5 million worth of the depositary shares. The conversion rate, dividend, and other terms will be determined at the time of pricing. 

The firm explained that it intends to use the cash raised for general corporate purposes, which could include funding growth capital expenditures, “such as the construction and expansion of lithium operations in Australia and Canada that are significantly progressed,” or repaying debt.

Albemarle’s revenue has been significantly hurt by plunging lithium prices caused by lower demand for electric vehicles, which use lithium in their batteries. In January, the company said it was cutting costs, including reducing 2024 capital expenditures from the year before and laying off workers.   

Albemarle shares ended Tuesday's session down 17.9% at $109.40, their lowest level in more than three years.

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  1. Albemarle. "ALBEMARLE ANNOUNCES PROPOSED PUBLIC OFFERING OF DEPOSITARY SHARES."

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