My Net Fone Limited enters trading halt: What shareholders need to know

My Net Fone Limited (ASX:MNF) has been a solid performer for investors over the last 12 months.

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Shares of My Net Fone Limited (ASX: MNF), which provides VoIP (Voice over Internet Protocol) services to residential and business enterprises, have entered a trading halt at the request of management pending an announcement by the company of a capital raising.

As is too often the case amongst Australian companies, My Net Fone will raise cash through a “placement to sophisticated and professional investors”, meaning that these investors will be given the opportunity to purchase shares at an unspecified discount to the stock’s closing price from yesterday.

In an unfair twist, minority shareholders who have held the stock through its ups-and-downs will not be given that same opportunity, but will instead have their ownership of the company diluted, possibly in a significant way.

My Net Fone did not provide any details on how much it was looking to raise, how many shares it would issue or at what price it would sell them.

Notably, diversified automotive company AMA Group Ltd (ASX: AMA) has also announced a capital raising by way of placement this morning in yet another case where small shareholders are treated unfairly by management.

My Net Fone’s trading halt will remain in place until the time that the company makes an announcement or until 29 June, whichever comes sooner. Depending on the amount being raised and the reason for it, the shares could experience a sharp fall upon their re-open.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. You can follow Ryan on Twitter @ASXvalueinvest. 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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