The St Barbara Ltd (ASX: SBM) share price has dropped lower this morning after announcing the completion of its troubled retail entitlement offer.
At the time of writing the gold miner's shares are down 1.5% to $2.56.
What happened?
This morning St Barbara revealed that it has completed the retail component of its 1 for 3.1 pro rata accelerated non-renounceable entitlement offer.
According to the release, the company received applications from eligible retail shareholders of approximately $4 million (net of withdrawals at that time) for the subscription of new fully paid ordinary shares at the offer price of $2.89 per share.
This compares to the $131 million that St Barbara was hoping to receive from shareholders prior to its shares crashing lower following a disappointing trading update.
What now?
As the offer was fully underwritten, the remaining $127 million shortfall will be allocated to the underwriter and sub underwriters.
This means the company has now successfully raised a total of $490 million through its entitlement offer and will be able to push ahead with its acquisition of Canada's Atlantic Gold Corporation.
But it also means that the underwriters are now left holding a significant number of shares that they most probably didn't expect to be holding.
All eyes will be on what the underwriter, believed to be Deutsche Bank, does next. I doubt they would sell at a loss and suspect they may become net sellers of its shares once the share price (hopefully) pushes above the offer price again. This could potentially weigh on its shares in the medium term and limit their upside potential for the time being.
Elsewhere in the industry, the Newcrest Mining Limited (ASX: NCM) share price and the Northern Star Resources Ltd (ASX: NST) share price are trading lower after the gold price pulled back during Asian trade.
