Why the Carbon Revolution (ASX:CBR) share price is frozen

The Carbon Revolution (ASX: CBR) share price will start the day halted after the company provided a $95 million capital raising update.

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The Carbon Revolution Ltd (ASX: CBR) share price will start the day halted after a capital raising announcement from the Aussie manufacturer. Carbon Revolution this morning requested a trading halt from the ASX before a major capital raising announcement to fund its latest growth plans.

Why is the Carbon Revolution share price in focus?

Carbon Revolution provided an update on its pro-rata, accelerated, non-renounceable entitlement offer and institutional placement. It comes as the company has decided to commence construction of phase 1 of its first "Mega-line".

The company has secured formal agreements to initiate detailed design and engineering relating to four new OEM (original equipment manufacturer) programs. A "significant proportion" of those relate to electric vehicles, with Carbon Revolution expecting a required 75,000 wheels per annum of additional capacity to meet demand.

That's a significant increase in the company's current production. To date, Carbon Revolution has sold ~40,000 wheels with 6 awarded programs announced by OEMs and in the market.

The Carbon Revolution share price will be one to watch when it resumes trading following the significant update from the Aussie manufacturer. CEO Jake Dingle said, "The award of these new OEM formal agreements validates Carbon Revolution's strategy and our world-class products and technology".

Carbon Revolution's capital requirement to build phase 1 of the Mega-line is ~$47 million. The fully underwritten $95 million equity raise will raise ~$53.5 million, with the institutional placement to raise a further ~$41.6 million.

The equity raising, combined with additional working finance arrangements, should help Carbon Revolution to reach breakeven cash flow.

The Carbon Revolution share price could be on the move when it returns to the boards after the company's news of the raise at $1.60 per share. That represents a 31.9% discount to the last closing price of $2.35 per share on Thursday 22 April.

Carbon Revolution will issue 26.0 million new shares under the placement component. A further 59.4 million new shares will be issued under the equity raising (or 40.6% of Carbon Revolution's existing issued capital).

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Carbon Revolution Limited. The Motley Fool Australia has recommended Carbon Revolution Limited. 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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