What happened
One of the more up-and-down stocks in recent months, cybersecurity specialist IronNet (NYSE: IRNT) lost more than 19% of its value on Thursday. The culprit seems to be a new share issue announced that morning by the company.
So what
IronNet disclosed in a regulatory filing that it and certain selling shareholders are floating a multifaceted issue of common stock, in addition to warrants to purchase same.
Image source: Getty Images.
The first component is a stock issue totaling more than 13.8 million shares. These shares back two issues of warrants. The first is a fresh flotation of 5.2 million; the other is an existing 8.6 million-plus one that was floated in a private placement to LGL Systems Acquisition, the SPAC that eventually morphed into today's IronNet.
The second component is a stock and warrant sale, which will take place from time to time, by a group of IronNet shareholders. This comprises a pile of just over 64 million shares, some of which derive from warrants, plus a fresh issue of 5.2 million warrants (the same number as the company's issue).
The cybersecurity company will reap funds only from its issue of warrants. It estimates this could bring in roughly $159 million.
Now what
IronNet wrote that it will use the monies "for general corporate purposes, including to fund potential future investments and acquisitions of companies that we believe are complementary to our business and consistent with our growth strategy." It didn't elaborate.
The company's flotation of 14 million shares that will potentially arrive on the stock exchange, plus the shifting of a big chunk of IronNet's existing shares, are clearly making investors jittery. Hopefully for them, the company will put the funds from its own flotation to good and productive use.
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