The Austral Resources Australia Limited (ASX: AR1) share price is plunging lower on the company's initial public offering (IPO).
The copper producer's stock hit the ASX for the first time at midday today. Sadly, it promptly dropped 15%.
At the time of writing, the Austral Resources share price is 17 cents, 3 cents a share down from its prospectus' offer price of 20 cents.
The dip follows not only the company's float but also media speculation that Austral is soon to be hit with legal action.
Let's take a closer look at Austral Resources' dramatic first day on the ASX.
Austral share price starts out in the red
The Austral Resources share price is tumbling out of the gates amid media reports Austral's former 51%-owner, Nathan Tinkler, plans to sue the company and its executive director.
Austral Resources responded to the speculation from an unnamed media source 2 hours before its IPO.
The company has confirmed claims Tinkler has threatened legal action against it and its executive director Dan Jauncey.
However, Austral Resources said neither it nor Jauncey has received "substantive documentation or information" on Tinkler's claims. Additionally, the company believes Tinkler doesn't have a feasible case against either party.
The company hasn't disclosed which media outlet its response is aimed at. However, The Australian carried reports of Tinkler's legal threat yesterday.
According to the publication, Tinkler sold his stake in Austral to Jauncey when copper prices dropped amid the global pandemic. He is now reportedly planning to sue for "shareholder oppression".
Whether Tinkler's potential legal bid is weighing on the Austral share price is impossible to say.
Today's float represents the end of an oversubscribed $30 million IPO process that, at its offer price of 20 cents, left the company valued at $89 million.
The funds raised will be put towards Austral's new Anthill Mine and its Mt Kelly processing plant. It will also help fund exploration activities and pay off debt.
Austral expects to be producing 10,000 tonnes of copper anode each year from the middle of 2022.
