Blue Apron sizes up options with new equity offering program

Financially squeezed meal-kit company Blue Apron indicated it’s weighing strategic alternatives as part of the launch of a new stock offering program.

New York-Based Blue Apron said after Friday’s market close that, under the “at-the-market” (ATM) equity offering program, it may periodically offer and sell shares of Class A common stock, with aggregate offering price of up to $70 million. Currently, Blue Apron sells meals online via subscription and through selected retailers.

“This offering program is intended to provide the company with access to capital from time to time,” Blue Apron stated, noting that it filed a prospectus supplement to a shelf registration statement that went into effect Nov. 10 and the aggregate offering price represents the amount remaining for issuance. “The number of shares to be sold, if any, under the ATM program will depend on, among other factors, market conditions, the company’s capital needs, and the anticipated benefits to the company and its shareholders.”

Proceeds from the ATM program would be used for general corporate purposes, including to “provide the company with greater flexibility to pursue, evaluate and potentially execute upon other financing opportunities, a potential business combination or other strategic transaction,” Blue Apron reported.

Funds also would go toward supporting working capital, operating costs and capital spending as well as to possibly paying down some or all of the company’s debt, Blue Apron said. Shares in the ATM program will be offered through sales agent Canaccord Genuity.

As of early afternoon trading on Monday, Blue Apron shares were down about 12% to 94 cents from a Friday close of $1.07. The ATM program announcement had pulled the company’s stock price down more than 20% in after-hours trading on Friday, leading to shares opening at roughly 87 cents on Monday.

The ATM offering program comes nearly two months after Blue Apron received written notice from the New York Stock Exchange (NYSE) on noncompliance with continued listing standards. The company is required to maintain a minimum average closing price of at least $1 per share and an average global market capitalization of at least $50 million (plus a total stockholder equity of at least $50 million) over a consecutive 30-day trading period.

Blue Apron reported the NYSE alert on Dec. 23, about two weeks after announcing plans to lay off 10% of its workforce and implement cost cuts to bolster its liquidity and balance sheet.

Blue Apron has struggled financially in recent years amid changes in the meal kit market, where industry players have found it harder than expected to win over customers and much of the business has shifted from online subscriptions to retail distribution.

In May, Blue Apron unveiled a plan to expand beyond its subscription service as part of a strategy dubbed “The Next Course,” aimed at establishing a path to sustainable growth, profitability and shareholder returns. The following month, Blue Apron announced the availability of its meal kits on Walmart.com and then in October began selling a selection of meal kits via Amazon.