Gorilla Technology Group Inc. (GRRR) had a rough Wednesday. The stock dropped nearly 27% after the company announced it had priced a $125 million private offering of senior unsecured convertible notes. The London-based AI infrastructure and security company plans to use the cash to fund its NeutraDC Batam data center project in Indonesia.

The offering consists of $125 million in aggregate principal amount of 7.50% Senior Unsecured Convertible Notes, Series B due 2031. The private placement is expected to close on or about July 17, subject to the usual conditions.

Gorilla Technology Prices 7.5% Convertible Notes

The notes will be issued at 100% of their principal amount and mature on June 15, 2031, unless they are converted, redeemed or repurchased earlier. They pay interest at an annual rate of 7.5%, with payments every six months. Gorilla can pay interest in cash or, under certain conditions, in ordinary shares.

The initial conversion rate is 39.2425 ordinary shares for every $1,000 principal amount of notes. That works out to an initial conversion price of about $25.48 per share — a 52% premium to the July 14 closing price of $16.77. The conversion price also has two adjustment mechanisms: a downward reset with a floor of $8.00 per share and an upward reset capped at about $31.85 per share.

Proceeds To Fund Indonesia Data Center Project

Gorilla said it will use the net proceeds to make advance payments that secure committed data center capacity and to fund the equity portion of equipment purchases for its NeutraDC Batam project in Indonesia, which the company announced on June 23. The remaining proceeds will go toward general corporate purposes.

Convertible debt offerings often pressure a company's stock because investors price in the risk of future share dilution if the notes are converted into equity. That's exactly what we're seeing here.

Technical Picture Weakens

The stock has been in a weak long-term trend. It has fallen 40.4% over the past 12 months and is trading below all major moving averages. At $12.45, GRRR traded 29.1% below its 20-day simple moving average of $17.47 and 25.6% below its 50-day simple moving average of $16.65. It also traded 13.4% below its 200-day simple moving average of $14.31.

Although the stock formed a golden cross in June, with the 50-day moving average crossing above the 200-day moving average, the recent selloff has failed to confirm that bullish signal. Momentum indicators also weakened. The MACD remained below its signal line, suggesting bearish momentum continues to outweigh buying pressure.

From a technical standpoint, resistance sits near $13.50. Support is around the $12.00 level.

Earnings Remain the Next Catalyst

The company's next major catalyst is its estimated earnings report on Aug. 13. Analysts expect earnings of 35 cents per share on revenue of $33.25 million.

Gorilla Technology Price Action

Gorilla Technology shares were down 26.68% at $12.29 at the time of publication on Wednesday, according to market data.