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The Bellamy’s Australia Limited share price is going totally gangbusters

The Bellamy’s Australia Limited (ASX: BAL) share price is up 12% in trade today after the baby formula business recently raised around $60.4 million in capital to help it renegotiate a supplier contract and buy a manufacturing facility.

The $28.5 million deal to buy the manufacturing plant is important because the plant is already licensed by the relevant Chinese government regulator to provide infant formula for sale into China.

Bellamy’s shares are now up an astonishing 33% over the past five trading days, despite the heavily dilutory nature of the capital raising meaning that 5 new shares will be issued for every 38 shares currently on issue.

The company also updated the market that it expects to post an EBIT loss of $9.5 million to $14 million for the six-month period ending June 30 2017, although excluding the one-off nature of the supplier renegotiation costs and capital raising the company says “normalised” EBIT would be a profit between $16.5 million to $20.5 million.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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