Plug Power, Carbon Done Right, BASF: Raising capital, climate protection projects, and cost optimization for returns

Plug Power: Capital increase and falling share price despite government support

The hydrogen and fuel cell specialist Plug Power has announced a capital increase. **Despite the current share price of around USD 2.92 per share, the Company plans to issue around 79 million new shares at USD 2.54 per share, aiming to generate USD 200 million in fresh capital.

The management also hopes to place a further 11.8 million shares if there is sufficient demand. This would increase the total number of new shares to approximately 90.8 million and raise gross proceeds of approximately USD 230 million before costs and fees.

The reason for this drastic measure is the Company's precarious financial situation. Plug Power is unable to generate sufficient cash from operations. The latest reports show cash reserves of less than USD 173 million, which are offset by debts of USD 950 million on the balance sheet.

Just two months ago, the US company received a government financial injection of around USD 1.66 billion for the construction of six production plants for green hydrogen. However, analysts have now revised their estimates downwards. Piper Sandler has lowered its price target from USD 2.50 to USD 2.40. The analyst consensus is a 'Hold' rating with an average price target of USD 5.48. Crucial to future success will be the Company's ability to successfully scale its technologies and effectively utilize US government support to return to profitability. The desire to harness green energy and the reality of reducing debt are worlds apart.

Carbon Done Right: Progress on reforestation project in Sierra Leone

While the development and expansion of green energy are still challenging, restoring natural CO₂ storage capacity is a key strategy for combating climate change.

Carbon Done Right is a leading provider of high-quality CO₂ certificates from afforestation and reforestation projects. Trading CO₂ certificates enables companies to reduce or offset their emissions cost-effectively and incentivizes investment in green technologies. The leading players are emission-intensive companies such as Meta, Alphabet, and Microsoft, as well as governments. This market-based approach promotes flexible solutions like Carbon Done Right's innovative climate protection projects.

Carbon Done Right invests in the research, restoration, and management of land and marine systems to increase greenhouse gas sequestration. The Company deploys venture capital in various government-led agreements in countries such as Sierra Leone, Yucatan, Guyana, and Suriname.

Carbon Done Right announced the successful achievement of all milestones for the 5th disbursement under a pre-purchase agreement announced in June 2023 for the Sierra Leone reforestation project. The team has already prepared over 500 hectares of land and is actively planting during the summer months. The project focuses on abandoned land in Sierra Leone, providing local smallholder farmers with direct income and a long-term stake in the yields. For the 2024 planting season, the Company plans to plant indigenous tree species on up to 2,000 additional hectares of wasteland.

CEO and Director James Tansey of Carbon Done Right has impressive expertise in sustainability. As a professor of innovation and sustainability at the University of British Columbia, he combines academic knowledge with entrepreneurial success. Tansey has raised over CAD 20 million in capital and created over CAD 100 million in enterprise value. His impressive projects include the carbon-neutral concept for the 2010 Winter Olympics and the Great Bear Forest Carbon Project.

Carbon Done Right works closely with the NGO Namati that protects the rights of landowners during the leasing process. The Company is also developing a new technology platform called 'Treecounter', which provides complete transparency and traceability for restoration projects and ensures that the value from the sale of CO₂ certificates is shared fairly with the landowner families. The project in Sierra Leone initially covers 5,000 hectares, with the aim of expanding by a further 20,000 hectares. The initial area could produce up to 1.7 million tonnes of validated and verified Verra CO₂ certificates over 30 years.

Verra is an internationally recognized organization that develops and manages standards for sustainable development, climate protection, and responsible business practices. The Company plays a central role in the certification and monitoring of projects that aim to reduce or avoid greenhouse gas emissions.

BASF in transition: Plant closures and portfolio optimization in response to location disadvantages

Germany is becoming an increasingly unattractive industrial location. High energy prices, a shortage of skilled labour, and heavy tax burdens are hampering competitiveness.

According to a report in the news magazine 'Mannheimer Morgen', BASF is now responding with far-reaching measures. At its headquarters in Ludwigshafen, 11 factories and 14 subplants will be closed. The plants are no longer profitable due to the high energy costs. Before Russia's war of aggression against Ukraine, BASF benefited ideally from cheap Russian gas. The only option for the Ludwigshafen-based company is to move forward and leave Germany. BASF will not give up the site completely and will examine whether investments in old plants make sense. Alternatively, new plants could be built at other locations.

For the near future, BASF is focusing on innovation and regional cooperation. For example, a climate-neutral heating network is to be established in the region, further reducing the Company's carbon footprint.

The Company is also streamlining its portfolio. It recently announced the sale of its flocculants business for mining applications to Solenis. Solenis, a global speciality chemicals manufacturer, supplies water-intensive industries such as paper, oil, gas and mining. The Company has 69 production sites and employs more than 16,000 people worldwide.

BASF's management of these tasks is of great importance to investors. The half-year financial report scheduled for July 26, 2024, will provide further insights into the extent to which the Company is making further progress with its restructuring on the turnaround course. The report can be downloaded from 7 a.m. CEST here.

Despite state support, Plug Power has to carry out a capital increase on unfavourable terms. The discrepancy between the high debt and the low cash reserves, as well as the inability to generate sufficient funds from the operating business, led the analysts to set the ranking to 'Hold'. Carbon Done Right, on the other hand, is showing promising progress in its reforestation project in Sierra Leone. The Company is well-positioned in the growing market for CO₂ certificates and focuses on sustainable projects with local involvement. With its expertise in sustainability and the development of innovative technologies such as 'Treecounter', Carbon Done Right offers its certificate clients complete transparency and can also benefit from the increasing demand for carbon offsetting. BASF is closing numerous plants in Germany. High energy costs and unfavourable economic conditions are leading the Company to take these measures. Nevertheless, BASF is focussing on regional cooperation. The forthcoming financial report will show whether the restructuring measures that have been introduced can bring about the hoped-for turnaround. Carbon Done Right looks sustainable and well-positioned, demonstrating the manoeuvrability of a speedboat compared to the tankers BASF and Plug Power.