Broker-dealer giant RCS Capital's stock price continued to fall Friday following the company's secondary stock offering announcement.
The company has proposed the sale of 20 million shares of Class A common stock 15 million from RCS Capital and 5 million from RCAP Holdings that would net an estimated $466.3 million (based on Thursday's closing price) in a secondary offering. The proceeds would help fund pending deals, according to an SEC filing.
Shares of RCS, with the ticker symbol RCAP, were down 9.35% early Friday afternoon to $25.90 on the New York Stock Exchange. The stock had closed Wednesday's trading at $29.74 and Thursday at $28.57 after the announcement late Wednesday. The last time RCAP traded at this price level was on March 10, when it finished trading at $25.37 before jumping to $28.05 the next day.
RCS, which is headed by executive chairman Nicholas Schorsch, said in the SEC filing that it intends to use proceeds of roughly $185.8 million from the stock sale to fund expenses related to completing pending acquisitions.
An additional $26.3 million would be placed in a special escrow account used to repay notes that were issued by RCS to broker-dealer First Allied Securities, which it recently acquired. The company also said it plans to "meet certain repayment and funding obligations" under its existing credit facilities.
RCS has had an active 2014, entering into deals to buy a string of broker-dealers including giant network Cetera Financial Group, as well as First Allied, Investors Capital, Summit Brokerage Services and J.P. Turner. Completion of the recent acquisitions will make RCS the biggest broker-dealer network and the third largest player in Financial Planning's FP50 ranking of the top independent broker-dealers.
RCS officials were not immediately available for comment.
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