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What Caused Shoals Technologies (SHLS) Stock To Fall 9% In Pre-Hours Session?

In premarket trading today, Shoals Technologies Group Inc. (NASDAQ: SHLS) fell -9.25% to close at $26.29 at the last check. This was followed by the announcement of an IPO.

What has SHLS declared?

A total of 20,000,000 shares of the company’s Class A common stock will be offered in an underwritten public offering, according to Shoals Technologies (SHLS), which made the announcement. The selling investors, which include Dean Solon and some of his associates, are offering 18,000,000 shares of the company’s Class A common stock while Shoals Technologies is offering 2,000,000 shares of its Class A common stock. The Underwriters shall have a 30-day option to acquire up to an additional 3,000,000 shares of Class A Common Stock from the Selling Stockholders.

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The parties to the Tax Receivable Agreement Amendment that SHLS entered into on November 29, 2022, also agreed to grant the Company the right to terminate the agreement until December 31, 2022 (the “TRA Termination Right”) in exchange for a termination fee of $58.1 million payable in cash (the “TRA Termination Consideration”).

In connection with the closing of this offering, SHLS expects to exercise its TRA Termination Right and pay some of the TRA Termination Consideration out of cash on hand and some of the remaining amount out of the net proceeds from the offering. The selling stockholders’ offer to sell their Class A common shares will not result in any profits going to SHLS.

SHLS’s CEO decided to step down:

Shoals Technologies (SHLS) said yesterday that Jason Whitaker, the company’s CEO, has notified the board of directors that he plans to stand down from his position as CEO in the early months of 2023 due to health concerns. Up to mid-March 2023, Mr. Whitaker will continue to work for the company in an advising capacity. With the aid of the executive search company Spencer Stuart, Brad Forth, Chairman of the SHLS Board of Shoals, is in charge of the Board’s search for a new CEO. Throughout this time of change, Mr. Whitaker anticipates continuing his role as a director on the board.

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