Why the Alcidion (ASX:ALC) share price is falling again today

The Alcidion Group Ltd (ASX: ALC) share price has continued its negative run this week and is again backtracking today. We take a closer look into why.

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The Alcidion Group Ltd (ASX: ALC) share price has continued its negative run this week and is again backtracking today. This comes despite the company announcing the completion of its Share Purchase Plan (SSP).

In mid-afternoon trade, the healthcare technology company’s shares are down 1.35% to 37 cents.

Why is the Alcidion share price on a downhill trend?

A possible catalyst for the fall of Alcidion shares is that investors are bracing for an impending share dilution.

According to Alcidion’s release, the company advised it has successfully completed its SSP following ‘very strong support’ from shareholders. Over 1,900 applications were received, totalling roughly $30 million. This represents a huge level of investment when compared to the company’s target of $2.5 million.

As a result, the board has decided to increase its SPP offer size to $3 million and scale back applications.

With the revised amount, roughly 9.37 million ordinary shares will be issued at a price of 32 cents apiece.

Most applicants will be allotted the minimum basic entitlement of 3,125 SPP shares (worth $1,000). Any remaining SSP shares will be issued on a pro-rata basis on the size of the applicant’s shareholding at the record date.

Investors who sold their parcel of shares between the record date and SSP closing date or held less than 1,471 shares will not receive any shares.

Alcidion expects the new shares to be issued and available for trading from next Tuesday.

The capital raising follows the successful institutional placement that was announced on 15 April 2021.

Together, the combined funds for both the placement and SSP will give Alcidion a cash injection of $18.4 million.

Comments from the CEO

Alcidion CEO, Kate Quirke commented on the result of the SSP:

The Company would like to thank all shareholders who participated in the Share Purchase Plan and the Placement for their continued support. We acknowledge that shareholders who subscribed may be disappointed by the scale back. Ultimately, balancing the strong SPP participation with the foreseeable capital needs of the business is in the best interests of all shareholders.

Alcidion share price review

Although Alcidion shares might be modestly lower today, for this week alone, shareholders have recorded a loss of almost 10%. However, when looking at the bigger picture, in year-to-date performance, the Alcidion share price has doubled.

The company has a market capitalisation of approximately $384 million, with more than 1 billion shares on issue.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd. The Motley Fool Australia has recommended Alcidion Group Ltd. 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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