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Vocus Group Ltd shares just hit a multi-year low

The Vocus Group Ltd (ASX: VOC) share price continued its poor run this week, leading to the embattled telco company’s shares falling to a multi-year low of $2.20.

This means that its shares have fallen over 49% since this time last year.

Why did its shares fall to a multi-year low this week?

While an underwhelming financial performance has weighed heavily on its share price over the last 12 months, its shares came under even more pressure this week following the release of a broker note out of UBS.

According to the note, UBS suspects that Vocus will only be able to sell its New Zealand assets for $250 million, which is approximately half of the value that the assets were initially thought to be worth.

This has the market concerned that Vocus may have to tap the market for funds through a capital raising to satisfy its debt covenants. With its shares at a multi-year low, a capital raising would likely be done at a price that would be reasonably dilutive to existing shareholders.

The broker has a neutral rating and $2.60 price target on Vocus’ shares.

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Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia owns shares of and has recommended Vocus Communications Limited. 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 Scott Phillips.

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