Here's why the FBR (ASX:FBR) share price is sinking 7% today

FBR shares are set to finish the week in negative territory.

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The FBR Ltd (ASX: FBR) share price is seeing red today following a company announcement regarding a recent capital raise.

At the time of writing, the robotics company's shares are down 7.55% to 4.9 cents. It's worth noting that regardless of the significant drop, its shares have shot 25% higher in the past month.

man grimaces next to falling stock graph

Image source: Getty Images

FBR completes placement

A major catalyst for FBR shares plummeting could be investor concerns about the impending dilution of shares.

According to its release, FBR advised it has received firm commitments from an array of investors to raise $10 million. The strongly supported placement primarily came from new and existing institutional and sophisticated investors from Australia, the United Kingdom, Hong Kong and the United States.

The placement will see around 222.22 million new ordinary shares created at an issue price of 4.5 cents apiece. This represents a 14% discount to the 5-day volume-weighted average price (VWAP) and an 11% discount to the 30-day VWAP.

FBR will use its existing placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval. The new shares will rank equally with the company's existing ordinary shares.

The proceeds received from the placement will be used for working capital and to deliver its commercialisation strategy. This includes:

  • Complete 27 builds in pipeline, plus additional builds yet to be committed;
  • Complete assembly of two additional Hadrian X construction robots to meet demand in Australian market;
  • Finalise the design of the next iteration of the Hadrian X and commence manufacturing;
  • Continue scale up of organisational capability post-COVID; and
  • Further development of BIM architectural software to enable integration into construction design and planning with customers.

FBR managing director and CEO, Mike Pivac said:

We are pleased to have attracted support from both existing and new institutional and sophisticated investors to help us progress the commercialisation of FBR's technology.

The funds raised will position the Company well to execute on and expand its current committed work pipeline and to capitalise on commercial opportunities that are frequently presenting themselves globally, particularly in North America and Europe.

FBR share price snapshot

Despite today's fall, the FBR share price has delivered modest gains for the past 12 months, up 6%. The company's share price reached a 52-week high of 6 cents in mid-November, before pulling back.

Based on valuation grounds, FBR presides a market capitalisation of roughly $108.12 million, with over 2.21 billion shares outstanding.

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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