Stock of Cereplast fell 28 percent early Friday after the company announced agreements to sell an offering to institutional investors.

Under the deal, the investors will pay $1.60 for each unit. Each unit has one share of stock plus a warrant to buy three-quarters of a share. The warrants have an exercisable price of $2.20 a share.

The company expects the offering will raise about $5 million. The offering is expected to close on approximately Nov. 16.

In midday trading on the Nasdaq, the share price of Cereplast had fallen to $1.43, a decline of 55 cents or 28 percent.

Based in El Segundo, Cereplast produces biological-based plastic resins used to manufacture packaging and other products.

Lazard Capital Markets and Ardour Capital Investments were agents for the stock offering.