Here’s why the Pacific Smiles (ASX:PSQ) share price is frozen

Here's why the Pacific Smiles (ASX:PSQ) share price is frozen

The Pacific Smiles Group Ltd (ASX: PSQ) share price is moving today due the company requesting a trading halt ahead of a capital raise.

Mitchell Lawler ❯

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Mitchell Lawler is an equity analyst at The Motley Fool Australia, covering Hidden Gems, Dividend Investor, and Everlasting Income. With a background in mechanical engineering and experience as a finance editor, Mitchell brings a sharp, systems-based approach to uncovering high-quality businesses others often overlook. He holds a Bachelor of Mechanical Engineering (Honours), a Graduate Certificate of Business, and is currently completing a Graduate Diploma in Applied Finance. A self-described permanent student of life, Mitchell maintains an unquenchable curiosity and a constant hunger to learn. While his expertise spans software, consumer goods, and building services equipment, Mitchell is indiscriminately driven by one core mission: to help investors build lasting wealth through thoughtful, long-term investing.

Published March 2, 2021 2:11 pm AEDT

Pacific Smiles Group Ltd (ASX: PSQ) shares are frozen today after the dental centre operator requested a trading halt as it announced details of a capital raising. The Pacific Smiles share price closed yesterday's session at $2.70.

What was announced?

The Pacific Smiles share price is not going anywhere today. This comes after the company advised it will seek to raise $15 million through a placement of new shares. Further to this, another $5 million will be raised through a share purchase plan (SPP).

The reasoning provided for the injection of funds is to accelerate growth opportunities and increase liquidity. This comes after the company recorded a solid result for 1H FY21. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 64.7% year-on-year to $21.2 million.

The company intends to open 15 new dental centres during FY21. From here, the rollout is expected to increase to over 20 per year. Furthermore, Pacific Smiles sees a long runway for growth ahead in Australia. In addition, it has a desire to capture more than 5% of the addressable market.

The placement will be at an offer price of $2.60, representing a 3.7% discount to its last close price. Meanwhile, the SPP will be offered to shareholders in Australia and New Zealand up to a maximum amount of $30,000.

Following the capital raising, Pacific Smiles will hold approximately $18 million of net cash and $37 million of debt facilities to orchestrate its expansion goals.

When will Pacific Smiles trade again?

As detailed in the announcement, the company's timeline indicates shares will commence trading on Wednesday 3 March. This is following the completion of the placement.

Eligible shareholders can expect to receive their application documents after 8 March. The SPP will then close on 18 March.

Notably, all new shares purchased through the cap raise will be eligible for Pacific Smiles 2.4 cents per share fully franked dividend.

Smiling about the Pacific Smiles share price?

In the last 12 months, the Pacific Smiles share price has grown by 54%. For comparison, the S&P/ASX 200 Index (ASX: XJO) has appreciated by 6.4% during the same time period. The last 6 months alone has returned 46% for shareholders of Pacific Smiles. I bet they can't wipe the smile off their faces about that!

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