It's a case of another day, another decline for the Zip Co Ltd (ASX: Z1P) share price on Friday.
In morning trade, the buy now pay later (BNPL) provider's shares are down 8% to a new 52-week low of $1.72.
This means that the Zip share price is now down over 43% in the space of a month and 22% since announcing its capital raising.
What does this mean for the share purchase plan?
Earlier this week Zip launched a $198.7 million capital raising. This comprises a (now complete) $148.7 million institutional placement at $1.90 per new share and a share purchase plan aiming to raise up to $50 million.
Proceeds from the placement and share purchase plan will be used to help Zip strengthen its balance sheet and position it for sustainable growth by providing more capital runway to execute on the potential synergies from the proposed acquisition of Sezzle Inc (ASX: SZL).
But with the Zip share price now trading 9.5% below its placement price, investors may be wondering what this means for the share purchase plan.
When announcing the share purchase plan, Zip advised that eligible shareholders have the opportunity to apply for up to $30,000 of new Zip shares at the lower of the placement price or a 2% discount to the five-day volume weighted average price of Zip shares up to and including the closing date of the plan. This is expected to be 1 April 2022.
Based on the current Zip share price, the latter is looking to be the more likely price for the share purchase plan. However, this may not be overly popular with shareholders given the minimal discount compared to the 14% discount that institutional investors received. This may ultimately lead to Zip's share purchase plan falling short of its target.
