The PointsBet Holdings Ltd (ASX: PBH) share price isn’t going anywhere on Monday and remains in its trading halt.
Why is the PointsBet share price in a trading halt?
PointsBet requested a trading halt on 2 September whilst it undertakes a major capital raising.
The sports betting company is aiming to raise approximately $353 million via a fully underwritten entitlement offer and an institutional placement.
These funds are being raised to strengthen its balance sheet in support its long term strategy.
This capital raising shows just how far the company has come in such a short space of time. In June 2019 PointsBet hit the ASX boards with a market capitalisation of ~$166 million. Now it is aiming to raise more than double this through its capital raising.
How is the capital raising tracking?
On Friday the company announced the successful completion of its institutional placement. It raised a total of $200 million at $11.00 per share, which represents a 19.6% discount to its last close price.
Management advised that the placement was strongly supported by both existing and new Australian and international institutional shareholders.
Next on the list is its entitlement offer. This morning the company launched the institutional component of the offer. Existing shareholders have the chance to pick up 1 share for every 6.5 shares they own for $6.50 per new share.
Retail investors will get their chance on Friday with the launch of its retail entitlement offer. These are on the same terms as the institutional component.
In addition, eligible shareholders will receive one new option for every two shares issued to them under the entitlement offer at no further cost. These new options will be exercisable at $13.00 and expire on 30 September 2022.
Use of funds.
PointsBet plans to use the funds raised largely on its US marketing costs in target states.
This follows its recent agreement with NBC Universal which included a committed marketing spend of US$393.1 million over five years.
It will also use the funds for technology and platform development and US business development. The latter includes market access and government licensing fees and sportsbook fit-out costs.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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