Here’s why the Oceania Healthcare (ASX:OCA) share price is falling today

The Oceania Healthcare Ltd (ASX:OCA) share price is falling today after the company announced details of a share purchase plan.

| More on:
white arrow pointing down

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Oceania Healthcare Ltd (ASX: OCA) share price is not having a great day today. Oceania shares are down 0.4% to $1.23 a share at the time of writing. Comparatively underperforming the S&P/ASX 200 Index (ASX: XJO), which is up 0.31% at the time of writing.

The current Oceania share price means that shares are now down 18% since 16 February. As well as 5.4% year to date.

Why might Oceania Healthcare shares be falling today?

Well, it’s been a dramatic week for this ASX healthcare share. On Tuesday morning, Oceania shares were placed in a trading halt at the request of the company. The catalyst for this halt was a proposed NZ$100 million capital raising program. As we reported at the time, Oceania was hoping to raise NZ$80 million via a fully underwritten placement from institutional investors. In addition to NZ$20 million through a non-underwritten retail offer. The possibility of an oversubscription being accepted.

The primary purpose of this capital raise was to fund an acquisition. Namely, the Waterford on Hobsonville Point retirement village in Auckland, New Zealand.

As such, Oceania shares were suspended from trading on Tuesday and returned to the markets yesterday. We also heard from the company yesterday about the success of its institutional placement. According to Oceania, the institutional placement was fully subscribed at a price of NZ$1.30 a share. According to the company, the offer was “strongly supported by existing institutional shareholders and also attracted significant bids from other institutional investors”.

Share purchase plan opens

But we also got an ASX announcement today outlining what the retail offer has in store for ordinary investors. The retail offer will be available for all existing shareholders as of 22 March. These shareholders will be entitled to apply for up to NZ$50,000 worth of new shares. The price will be the lower of either NZ$1.30 a share (or approximately $1.19 on current exchange rates), or “a 2.5% discount to the five-day volume-weighted average price of Oceania Healthcare Shares traded on NZX [the New Zealand Stock Exchange] during the five NZX trading days up to, and including, the Closing Day [12 April 2021]”.

Investors will receive any shares applied for on “on or about” Friday 16 April.

Thus, it’s understandable that the Oceania Healthcare share price is falling today. Why would existing investors buy shares on the ASX at today’s price of ~$1.23 when they can apply for more shares at roughly $1.19? This is the likely reason behind the Oceania Healthcare share price weakness today.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

An ASX investor relaxes on her couch as the Harvey Norman share price drops due to the shares trading ex-dividend from today.
Opinions

2 little-to-no-debt ASX 200 shares to buy in a downturn: fundie

Coles is one of the picks for being able to perform during a recession.

Read more »

A little Asian girl is so excited by the bubbles coming out of her bubble machine.
Share Gainers

Why has the Redbubble share price burst 17% higher on Monday?

What pushed the e-commerce company's shares higher today?

Read more »

Businessman cheering at desk with arms in the air
Share Market News

Here are the top 10 ASX 200 shares today

These ten ASX 200 shares outperformed all others on Monday.

Read more »

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Share Gainers

Guess which ASX tech share just soared 40% on takeover news

This small-cap ASX tech share has shot up 40% today.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers rate these ASX shares as buys...

Read more »

A man wearing a suit holds his arms aloft with a smile on his face is attached to a large lithium battery with green charging symbols on it.
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Monday

It's all about that lithium for the most traded ASX 200 shares today.

Read more »

a man sits on his sofa loong at his phone and raises a fist to the air in happy celebration.
Share Market News

Why is the Latin Resources share price leaping 30% today?

What a great day it's been for Latin Resources shareholders.

Read more »

Woman sits in lotus position on the sand in front of a lake as another woman leapfrogs over her.
Share Gainers

Why is the Lake Resources share price leaping 11% today?

Lake shares extend gains today.

Read more »