BWX share price sinks 38% following capital raising at dizzying discount

BWX shares are feeling the wrath of investors after the steep discount offered by the company.

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Key points

  • BWX shares sink 38% to an all-time low of 72.5 cents 
  • The company proposed a $23.2 million capital raise to repay off its debt and provide additional funds for working capital 
  • The placement and non-renounceable entitlement offer is offering a steep discount of 48.7% to 60 cents per share 

The BWX Ltd (ASX: BWX) share price has come out of a trading halt to plummet during mid-morning trade.

This comes after the company announced an FY22 trading update as well as a capital raise to reduce its debt.

At the time of writing, the personal care products company’s shares are fetching for 72.5 cents, down 38.03%.

What’s driving the BWX share price lower?

Investors are scrambling to sell BWX shares after an impending share dilution from the company.

According to the release, BWX advised it has launched a fully underwritten $23.2 million capital raise.

The details consist of a $13.5 million placement to sophisticated and professional investors and a $9.7 million non-renounceable entitlement offer.

Listed at a price of 60 cents apiece, this represents a 48.7% discount to the last closing price of $1.17 on 23 June 2022.

Approximately 38.6 million new fully paid ordinary shares in BWX are set to be issued under the offer. This accounts for around 24% of the company’s existing ordinary shares on issue.

The proceeds will support BWX’s business operations as well as accelerate its “debt reduction towards more conservative leverage ratios.”

Pro-forma net debt as at 30 June 2022 is expected to be between $58-62 million (following the net proceeds received).

FY22 trading update

Furthermore, BWX provided an FY22 trading update in regards to its revenue and earnings guidance.

Management is forecasting underlying revenue to tip $212 million, up 9% from the $194.3 million achieved in FY21.

However, underlying EBITDA is expected to come in the range of $12-$16 million, down 59% from $34.5 million in FY21.

Looking further ahead, BWX’s financial metrics are predicted to greatly change in FY23. 

The business is forecasting revenue to be roughly $260-$270 million, and EBITDA to come in between $45-$49 million.

The BWX share price has fallen by more than 86% over the past 12 months and is down 84% year-to-date.

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 recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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