Why clean energy fuel stocks soared today

stock clean energy fuel (customs 15.51%) The renewable natural gas (RNG) development and supply specialist was up 13.9% as of 3:05 PM ET on Wednesday after announcing a new financing facility of up to $400 million with alternative investment firm Stonepeak. Stonepeak specializes in infrastructure and real estate assets and has $57.9 billion in assets under management.

Some welcome financial flexibility for clean energy fuels.

Clean Energy Fuels’ agreement will begin with a six-year, $300 million senior secured loan paying interest at 9.5% per annum, according to a press release this morning. It also provides an additional $100 million deferred draw term loan over two years.

In connection with the transaction, Clean Energy also issued stock warrants to Stonepeak to purchase 10 million shares of its common stock at an exercise price of $5.50 per share and 10 million shares of its common stock at an exercise price of $6.50 per share. The warrants expire on June 15, 2032 and are exercisable at any time after December 12, 2025. As of this writing, clean energy stocks are trading at $3.60 per share.

The move provides Clean Energy Fuels with significant financial flexibility as the company works to capitalize on growing demand for RNG, especially as heavy-duty transportation vehicles transition to the fuel. For perspective, Clean Energy Fuels ended last quarter with just over $174 million in cash on its balance sheet and about $225 million in total debt (including $145.5 million in long-term debt). Sales last quarter fell 24% year-over-year to $95.6 million, as lower natural gas prices offset a 4.8% increase in RNG gallon sales.

What’s next for clean energy stocks?

Funds from this facility will be used to repay existing loans, provide capital for a new RNG production facility, and expand clean energy fueling infrastructure for the heavy truck market.

“This funding agreement is very timely as more RNG development opportunities continue to emerge and we expect to build additional stations to accommodate the increased demand resulting from the arrival of RNG. Cummins‘A 15-liter natural gas engine,’ said Clay Corbus, Clean Energy’s senior vice president of strategic development and head of renewable fuels.

In fact, management last highlighted Cummins’ innovative new natural gas engines when Clean Energy released its quarterly results last November. This points to several major heavy-duty trucks currently operating successful test units along some of the country’s most challenging trucking routes.

Ultimately, if Clean Energy Fuels can effectively leverage this new financing facility with StonePeak as it strives for sustained, profitable growth, this could be good news for long-term shareholders.