The 4DS Memory Ltd (ASX: 4DS) share price is one of the worst performers on the ASX today. This comes after the memory storage company announced its capital raising efforts and came out of the trading halt it had been in since Tuesday.
At the time of writing, 4DS Memory shares are down a sizeable 11.86% to 5.2 cents. In the past month alone, its shares have been hit hard by investors, falling a massive 60%.
What’s happening with 4DS Memory?
A catalyst for the steep dive in the 4DS Memory share price today is possibly the fear of an impending share dilution.
According to its release, 4DS Memory has received firm commitments to raise $2.5 million through a share placement.
The offer was presented to both domestic and international institutional investors at an issue price of 4.8 cents apiece. This equates to roughly 52 million new ordinary shares being added to the company’s registry.
In addition, 4DS Memory will offer a share purchase plan (SPP) to existing shareholders to raise a further $2.5 million. The SPP will be offered on the same terms as the placement.
The lead manager, Mac Equity Partners International, will also receive 5 million options exercisable at 8 cents each. This will expire within 2 years from the date of issue.
The funds received from the equity raise will be used towards supporting a number of growth initiatives for the company. This includes:
- Research and development costs;
- Working capital; and
- Expenses of the offers such as the 6% lead manager fee.
The closing date of the SPP offer is set for 14 December, with issuance of the shares on 16 December.
About the 4DS Memory share price
The start of 2021 saw the 4DS Memory share price shoot higher until the end of January, which was followed by a sideways channel.
Although, since mid-August, it has been on a continuing decline, posting a 12-month loss of roughly 65%.
4DS Memory has a market capitalisation of around $67.43 million, with more than 1.32 billion shares on its books.