Massachusetts-based industrial 3D printer manufacturer Desktop Metal (DM) has filed a prospectus for a mixed securities shelf offering of up to $250 million.
Submitted on 14 February 2024 in a Securities and Exchange Commission (SEC) Form S-3 filing, the mixed shelf offering includes a range of securities. These include preferred stock, debt securities, warrants, units, and up to $75 million of class A common stock.
Following the announcement of the mixed shelf prospectus, Desktop metal stock, which trades on the New York Stock Exchange (NYSE) under the ticker symbol “DM,” fell slightly from $0.66 on 14 February to $0.61 the following day.
The mixed shelf offering follows the news of DM’s $50 million cost-reduction plan earlier this year. This decision came after the termination of Stratasys’ deal to acquire Desktop Metal in September 2023.
A $250M mixed stock offering
Shelf offerings allow companies to raise capital by issuing new securities without needing to immediately sell them. The securities are stored “on the shelf,” and can be issued when market conditions are favorable, or when business needs demand them. Registered with the SEC, the securities can typically be held in reserve for up to three years.
Unlike regular shelf offerings which allow only one type of security to be registered at any one time, mixed shelf offerings allow companies to combine various types of securities in a single offering.
This allows for greater flexibility, efficiency, and reduced administrative burden. What’s more, offering a mix of securities allows companies to tailor their fundraising strategy to suit specific market conditions and investor preferences.
Desktop Metal’s mixed shelf offering includes a range of class A common stock, preferred stock, debt securities, warrants, and units.
DM’s class A common stock offering has an aggregate price of up to $75 million, and will be sold by Cantor Fitzgerald & Co. The New York-based financial services firm will act as sales agent for the DM stock through a Controlled Equity Offering SM Sales Agreement, outlined in the Form S-3 filing.
The current state of Desktop Metal
The $250 million mixed shelf offering follows a relatively turbulent period in Desktop Metal’s history, which has seen the company move to raise capital, cut costs, and improve profitability.
Throughout 2023, DM pursued a merger with leading 3D printer manufacturer Stratasys, amidst an M&A saga which also included 3D Systems and Nano Dimension. However, the merger collapsed in September 2023 when 78.6% of Stratays shareholders voted against the deal during an Extraordinary General Meeting of Shareholders (EGM).
In a survey on the future of 3D printing, 3D printing experts predicted that additive manufacturing market consolidation efforts will continue in the years ahead.
Following this, DM CEO Ric Fulop announced that plans to “lower operating costs” and “generate revenue” were on track. These plans included a $50 million cost-reduction initiative announced in January 2024, which saw the company reduce its workforce by 20%. Desktop Metal hoped that these actions would align its cost structure to current market dynamics.
The plan was part of a broader strategic business review, and other cost-cutting actions. These include continued consolidation of facilities and product rationalization aimed at accelerating a path to profitability, following what the company has called “a downturn in the additive manufacturing industry.”
Efforts to streamline operations and cut costs also saw the company sell its Aerosint SA subsidiary to high-precision components and systems manufacturer Schaeffler Group. Founded in 2016, Aerosint’s patented Selective Powder Deposition (SDP) technology allows for simultaneous, multi-material 3D printing.
However, DM has assured that it is still pursuing its acquisition-based ‘AM 2.0’ strategy, and will continue to make investments to enable revenue generation and achieve its long-term goal of sustainable profitability.
Additive manufacturing stock offerings
Desktop Metal is not the only additive manufacturing company to raise capital via stock offerings.
In 2021, German 3D printer manufacturer voxeljet entered into a definitive agreement with its investors for the purchase and sale of 621,170 of its ordinary shares in the form of American Depository Receipts (ADRs), in a registered direct offering. Through this, the company hoped to increase its capital, and use the net proceeds of the issuance for “general corporate purposes.”
Voxeljet’s offering was made in accordance with an effective shelf registration statement on Form F-3, a regulatory form to register securities used by foreign private issuers, the company had previously registered with the SEC
Elsewhere in 2021, Belgian software and 3D printing service provider Materialise announced its intentions to commence a registered public offering of four million American Depository Shares (ADSs). The company offered the ADSs via an effective shelf registration statement on Form F-3, filed with the SEC. This action reflected an effort from the 3D printing software firm to raise capital.
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Featured image shows Desktop metal 3D printers. Photo via Desktop Metal.
