The Adriatic Metals Plc (ASX: ADT) share price is sliding 15.92% into the red during early afternoon trade and is currently changing hands at $2.80.
Adriatic shares are on the move after major shareholder Sandfire Resources Ltd (ASX: SFR) completed the sale of its equity interest in the company.
Here's what we know.
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Why is the Adriatic Metals share price down 16%?
Sandfire Resources originally announced its intention to divest away from Adriatic yesterday, advising of a secondary placement that was due to take place.
Today Sandfire confirmed it had completed the sale of 34,600,780 CHESS depositary interests – representing ordinary shares – in the capital of Adriatic Metals.
This is is a sizeable chunk of Adriatic's float, and comprises a 16% stake in the company that was sold off today in total.
The lot was sold at a price of $2.80 per Adriatic "secondary placing share", representing a 16% discount to the company's closing share price yesterday, after it went into a trading halt pending a separate announcement.
Effectively, Adriatic's shares were sold to institutional investors and others in the placement below the market price at the time, never a good feeling for current shareholders.
Lead bookrunners, Canaccord Genuity Group Inc, RBC Europe Ltd, and Stifel Nicolaus Europe Limited, each helped in the sale to their pitchbook of institutional investors.
Gross proceeds from the sale came in at $97 million – of which Adriatic Metals will receive none, not even the crumbs.
Aside from Sandfire's divestment, Adriatic also advised it too had completed an institutional placement to raise additional capital, to fund its Vares Silver Project.
Curiously, Adriatic advised that the placing price of 1.5174 pounds per new ordinary share, is equivalent to "A$2.80 per CHESS Depositary Interests representing such New Ordinary Shares" – the exact price of Sandfire's sale.
Canaccord Genuity, RBC and Stifel Nicolaus were joint bookrunners on Adriatic's placement as well.
The placement formed part of a greater "project finance package" the company completed to fund the construction of the Vares site.
It consisted of a term sheet with a liability of US$142.5 million, comprised of a US$120 million debt senior debt facility and a US$22.5 million copper stream.
The news isn't enough to save the Adriatic Metals share price today, with investors driving prices lower from the selling pressures.
Adriatic Metals share price snapshot
The Adriatic Metas share price has climbed 20% this year to date, however has struggled over the last 12 months.
There, it has posted a return of just 18%, behind the S&P/ASX 200 index (ASX: XJO)'s gain of around 20% in that time.
