Vertex Energy (VTNR) Update - Oct 26

[dan_s]

Vertex is high on my Watch List.

Stifel's take:

Vertex Energy, Inc. (VTNR, $5.33, Buy; Target $14.00)
VTNR: Plan B to Close Shell Mobile - $155mm Convertible Preferred at 37% Premium to Common, 6.25% Coupon 3-Year Non-call - Michael E. Hoffman
We maintain our Buy rating and our $14 target price is under review on Vertex Energy (VTNR, Buy, $5.33). VTNR announced it will issue $155mm convertible preferred. The details are near final but subject to change. The preferred will be issued with a 10% original issue discount, with a 6.25% coupon. The premium to the common is about 37% (it is not clear if on Oct 25 close or a prior 10-day average). There is a three year non-call provision. Why do this? To assure closing of the Shell Mobile deal and not wait for the closing of the used oil asset sale to Clean Harbors (CLH, Buy, $114.28). VTNR believes the CLH deal will close but well into 1Q22 which puts its timeline to be in production with renewable diesel by mid-year in jeopardy if waiting for these funds to close. The preferred issuance assures closing of Shell.