Plum Creek Timber Company, Inc. (PCL) today announced its underwritten public offering of 12,100,000 shares of its common stock, par value $0.01 per share, was priced at $45.00 per share. The offering is expected to close on November 4, 2013, subject to customary closing conditions. In addition, Plum Creek has granted the underwriters a 30-day option to purchase up to 1,815,000 additional shares of Plum Creek common stock to cover over-allotments, if any.
If the underwriters support the stock, it'll hold right around $45. Once the underwriting is completed, the stock will likely sink like a stone. No one with any investing common sense wants to hold a dead-money stock. The dividend is meaningless when the stock demonstrates that it can drop the equivalent of nearly 3 times the annual dividend in a single day. It's a good thing the market was strong... it might have been a lot worse. IMO, PCL will drop below $40 before it goes above $50. This is now a broken stock. There's no longer any technical support in sight. Management should have pre-announced some hints about what they were planning with a strong argument in its favor. That might have blunted the impact somewhat and made it possible to get a better price for the secondary. They handled this thing like total amateurs. I'm glad I'm out and feel sorry for the longs. Congratulations to the shorts.