Why is the AMA Group (ASX:AMA) share price halted?

The company’s shares have taken a beating lately…

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The AMA Group Ltd (ASX: AMA) share price has been going nowhere since yesterday morning.

A trading halt came into effect pending a release from the smash repair company before market open on Monday.

The last closing price of AMA Group’s shares was 42 cents apiece.

Let’s take a closer look at what the company is planning to announce to the ASX.

Why is AMA Group share price in a trading halt?

AMA Group provided little detail in regards to the reason why it requested the ASX to freeze its shares.

According to the notice, AMA Group advised two consecutive trading halts are in place in respect to its securities.

In particular, the company is carrying out a capital structure review to manage short-term disruptions caused by COVID-19.

As such, plans are underway to initiate a capital raise to shore up AMA Group’s balance sheet.

This comes after the company released its full-year results late last month, acknowledging COVID-19 related repair volume decreases. The average decline in vehicle collision repair volume fell 17% compared to prior period.

At the end of the 2021 financial year (30 June), AMA Group had $64.2 million in cash and $237.5 million of debt.

The news comes after last week’s response to media speculation regarding its capital position is in tatters. AMA Group was quick to refute the reports highlighting that an equity raise is to fuel further growth.

It is expected that its shares will resume normal trading on or before Friday 10 September following a release.

More on AMA Group shares

It’s been a whirlwind 12 months for AMA Group shares, treading downwards to reach a 52-week low of 42 cents. The company’s share price has lost around 30% in value since this time last year. However, when looking at 2021 alone, its shares have fallen almost 50%.

On valuation grounds, AMA Group presides a market capitalisation of roughly $313.5 million, with approximately 746 million shares on issue.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

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