The Xtek Ltd (ASX: XTE) share price is freefalling on Monday following the company's update on its latest equity raise.
At the time of writing, the defence contractor's shares are fetching for 28 cents, down 23.29%.
What did Xtek announce?
Investors are heading for the hills after Xtek shares came out of a trading halt today.
According to an announcement this morning, Xtek advised it has successfully completed an underwritten institutional placement. The offer received interest from both new and existing institutional investors, raising $2.7 million.
Xtek will issue around 10.4 million ordinary shares under the placement. The price for each share is set at 26 cents apiece, reflecting a 28.8% discount to the last closing price of 36.5 cents on 29 September.
Settlement of the shares is expected to occur on 8 October with allotment and commencement of trading on 11 October.
In addition, Xtek will also make a 1 for 3.7 pro-rata non-renounceable entitlement offer to all eligible security holders. The partially underwritten placement is seeking to raise a further $5 million on the same terms.
Approximately 19.2 million new shares will be added to the company's registry.
The record date is scheduled to fall on Thursday, 7 October.
In total, $7.7 million will be raised to fund a number of initiatives for Xtek. These include:
- Development of an Australian-made small VTOL Unmanned Aerial Vehicles (UAV) for upcoming sales opportunities with the Australian Defence Force;
- Development of the next XTatlas actionable intelligence software applications;
- Expansion of the range of hard armour plates and helmets made using its patented XTclave process; and
- Provision of working capital required to grow the company's business and meet ongoing financial obligations.
Xtek share price review
It's been a woeful year for Xtek shares. They've gradually moved more than 50% lower over the past 12 months. It's worth noting the company's shares are currently trading at multi-year lows today.
Xtek presides a market capitalisation of about $19.89 million and has just over 71 million shares on its books.