Internap Corp (NASDAQ:INAP) investors cheer the news that the company has raised $43 million in a common equity private placement. 23.8 million shares of the company’s common stock will be sold at yesterday’s closing price of $1.81 to a group of investors that include affiliates of or funds managed by GAMCO Investor and accounts advised by Avenir Corporation.
Internap shares reacted to the news, jumping nearly 23% to $2.23 in Wednesday’s trading session.
The Company will use the net proceeds of the offering to repay a portion of its term loan indebtedness. The equity offering and debt repayment will enable the Company to meet conditions under the Third Amendment and Waiver to Credit Agreement dated as of January 26, 2017 that among other things eases restrictions on the interest coverage ratio and leverage coverage ratio covenants. The Company expects this to provide it with additional operating flexibility as it continues to implement its business plan.
“The confidence demonstrated by our investors in the future of INAP is extremely motivating to the entire management team as we continue our comprehensive operations improvement initiative,” said Peter D. Aquino, President and Chief Executive Officer. “The speed with which our new team is moving to right-size our business and invest in sales and marketing to capture strong market demand for Colocation and Cloud services is impressive. The next steps in the 2017 transformation of the new INAP is to approach the market as two pure plays, complete our debt refinancing, and begin to consider strategic opportunities to bolster our organic growth.”
INAP reaffirms guidance for 2016, consisting of revenue of $297 million to $300 million, adjusted EBITDA of $81 million to $83 million, and capital expenditures of $47 million to $50 million, and its guidance for 2017, consisting of revenue of $275 million to $285 million, adjusted EBITDA of $84 million to $87 million and capital expenditures of approximately $42 million.
On the ratings front, Internap has been the subject of a number of recent research reports. In a report issued on December 20, Raymond James analyst Frank Louthan maintained a Buy rating on INAP, with a price target of $3.00, which represents a potential upside of 60% from where the stock is currently trading. On November 4, The Benchmark Company’s Daniel Kurnos reiterated a Buy rating on the stock and has a price target of $4.00.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Frank Louthan and Daniel Kurnos have a yearly average return of 12.8% and 12.5% respectively. Louthan has a success rate of 73% and is ranked #254 out of 4496 analysts, while Kurnos has a success rate of 62% and is ranked #300.
Internap Corp. engages in the provision of performance-optimized information technology infrastructure services. It operates through the Data Center Services and Internet Protocol (IP) Services segments. The Data Center Services segment includes colocation, hosting, and cloud services. The IP Services segment covers the patented Performance IP service, content delivery network services, IP routing hardware and software platform, and Managed Internet Route Optimizer Controller.