4DS Memory Ltd (ASX: 4DS) shares have returned from their trading halt with a thud.
In morning trade, the ASX All Ords stock is down 10% to 3.7 cents.
Image source: Getty Images
Why is this ASX All Ords stock crashing?
On Wednesday, as we covered here, the semiconductor technology company requested a trading halt so it could launch a capital raising.
This came a month after the company pulled the plug on another capital raising "because the offering wasn't reflective of what the Board considers is in the best interest of shareholders."
At that point, the ASX All Ords stock was trading at 8 cents. It went into its latest trading halt almost 50% lower at 4.1 cents.
Clearly, the decision to postpone its capital raising wasn't a good one and destroyed significant shareholder wealth.
Capital raising complete
This morning, 4DS Memory revealed that it has received binding commitments from institutional and high net worth investors for a placement of shares to raise $6 million.
According to the release, these funds will be raised a 3.6 cents per new share, which represents a 12.2% discount to its last close price. However, it also represents a massive 55% discount to where it shares were trading when the previous capital raising was abandoned.
The placement will also include the issue of 1 free attaching option for every 1 share issued. These will be exercisable at the same price of 3.6 cents per option with an expiry of 28 February.
Management advised that the placement attracted strong interest in excess of the shares available to allocate.
But the ASX All Ords won't be stopping there and advised that it hopes to raise a further $2 million through a share purchase plan (SPP).
This will be undertaken at the same price and will include the free options. The company notes that an institutional fund has also committed to subscribe for any shortfall securities from the SPP up to a maximum of $1 million.
Why is it raising funds?
The company advised that the capital raised will be used to progress the design agreement with Infineon Technologies. This will see Infineon assign resources to design a custom ReRAM memory test chip for 4DS, based on 4DS requirements.
Commenting on the news, executive chairman, David McAuliffe, said:
The Board is highly encouraged by the completion of the Placement following on from our recent Design Agreement with Infineon Technologies, a global semiconductor leader, and our ongoing work with imec. The Company will also launch an SPP on the same terms as the Placement for existing shareholders who have shown continued support for the Company and I encourage them to participate.
