Lakeland Industries Inc. said Friday that it will raise $11.2 million in order to repay a loan and expand production of hazmat suits used by health workers treating Ebola patients.
The Ronkonkoma-based maker of protective garments and gear will use the funding to expand output of its ChemMAX and MicroMAX protective hazmat suit lines in order to "keep up with the significant global demand" for them in the wake of the Ebola outbreak, Christopher J. Ryan, president and CEO of Lakeland, said in a news release.
Since early September, Lakeland has increased production of the two hazmat suits by 50 percent, an outside spokesman for the company said. The protective garments cost $20 to $50, depending on customer specifications and delivery speed.
Lakeland will also use the financing to repay a $3.6 million loan held by LKL Investments LLC. The financing arranges for a private placement of common stock at $10 per share, substantially lower than the company's recent share price.
Shares of Lakeland fell about 14 percent Friday to close at $13.09. News of the Ebola crisis catapulted Lakeland shares from a 52-week low of $4.75 in December 2013 to a high of $29.55 in mid-October before a recent decline.
The share price of the private sale is higher than the company's one- or two-year trailing averages, the spokesman said.
"This offering provides us with the capital we need to turn our attention to our core businesses and pay down expensive debt," Ryan said.
Despite the stock's recent decline, expected demand for about 300,000 disposable hazmat suits per month to treat Ebola patients in Africa bodes well for Lakeland, said Brian Rafn, director of research at Milwaukee-based Morgan Dempsey Capital Management, a Lakeland shareholder.
"It's a Jack Bauer stock," he said, referring to the hero on the apocalyptic TV show "24." The stock benefits from a crisis atmosphere, Rafn said. Even when the Ebola threat ends, Lakeland still could find strong demand as U.S. government agencies replenish aging hazmat suits stockpiled in the wake of the 9/11 attacks.
Rafn said the company's private stock placement to pay off high-interest debt was a sound business decision.
Headquartered near MacArthur Airport, Lakeland has manufacturing facilities in Decatur, Alabama, and in Brazil, Mexico and China. For fiscal 2014 the Chinese market accounted for about half of Lakeland's $91.4 million in revenues.