Petrel Resources Raises £250,000 Through Heavily Discounted Placing
Why we think this is bad
The heavily discounted 45% placing price, representing a significant 11.5% dilution to existing shareholders, is a very negative sign for Petrel Resources. This suggests low investor appetite and potentially a last resort funding measure for the micro-cap company, whose previous activities in Iraq have struggled. While the additional capital could support future growth, the negatives outweigh the positives in this case.
Key Points
- Petrel Resources raises £250,000 through a placing of 23,809,523 new ordinary shares at 1.05p per share
- The placing price represents a 45% discount to the previous closing price of 1.899999976158142p
- The placing will result in an 11.5% dilution to existing shareholders
- The net proceeds will provide additional working capital for the company's activities in Iraq and elsewhere
Summary
Petrel Resources Plc (Lon: PET) has raised £250,000 (before expenses) through a placing of 23,809,523 new ordinary shares at a price of 1.05p per share, representing a 45% discount to the previous closing price. The placing will result in an 11.5% dilution to existing shareholders.
The net proceeds will provide the company with additional working capital as it continues to assess new projects in Iraq and elsewhere. However, the heavily discounted raise is a very negative sign, suggesting low investor appetite and potentially a last resort funding measure for the micro-cap company, whose previous activities in Iraq have struggled.