Colony Capital Stock Crashes 20% as Debt Struggles Continue
Shares of Colony Capital, Inc. (NYSE: CLNY) are down 18.6% at 2 p.m. EDT on July 16 after falling as much as 20% earlier in trading. Today's sell-off came after the company issued a press release after market close yesterday, saying that it was proposing a private offering to raise $200 million, with the plan to use the proceeds to repurchase and repay 3.875% convertible senior notes that are due in 2021.
It's a bit strange that shares would fall so sharply on the news that the company was lining up additional cash, particularly since the new debt would be due in 2025 and be used to repay debt that matures in 2021. The company has also halted its dividend for now, a prudent move considering many of its properties aren't even generating enough cash to meet loan obligations.
Empty hotels are a major problem for Colony Capital. Image source: Getty Images.
Source Fool.com
