Zotefoams Announces Discounted Equity Raise for Employee Schemes
Why we think this is bad
The equity raise is being conducted at a significant 98% discount to the previous closing price, which is a very negative sign indicating low investor appetite for the company's shares. The dilution to existing shareholders is also a major concern, as the new shares will represent around 1.05% of the enlarged issued share capital. The purpose of the raise, being for employee share schemes rather than growth or debt reduction, is not particularly compelling. Overall, this discounted raise raises questions about the company's financial health and growth prospects.
Key Points
- Zotefoams to issue 400,000 new shares at 5 pence each
- New shares represent a 98% discount to the previous closing price of 252 GBp
- Raise is to satisfy future exercises of employee share awards
- New shares will dilute existing shareholders by around 1.05%
Summary
Zotefoams plc has conditionally agreed to allot and issue 400,000 new ordinary shares at the par value of 5 pence each, representing a 98% discount to the previous closing price of 252 GBp. The new shares will be issued to the company's employee benefit trust to satisfy future exercises of awards under the Group's share incentive schemes. This discounted raise, which will dilute existing shareholders by around 1.05%, raises concerns about the company's financial health and growth prospects.