Why is the Bubs share price in a trading halt?

The Bubs share price has been halted. What’s going on?

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The Bubs Australia Ltd (ASX: BUB) share price won’t be going anywhere on Tuesday.

This morning the junior infant formula company’s shares were placed into a trading halt.

What’s going on with the Bubs share price?

This morning the Bubs share price was slammed into a trading halt at the company’s request.

According to the release, rather predictably after the release of no less than eight market sensitive announcements in the space of five weeks hyping up its US activities, this trading halt has been requested so the company can launch another equity raising.

While no details have been released to the market, the AFR reports that Bubs is seeking to raise $63 million from investors. This will reportedly comprise a $32.4 million placement and $30.6 million rights issue, based on a 1 for 10.4 basis.

The company is aiming to raise these funds at 52 cents per new share, which represents a huge discount of 18.75% to the latest Bubs share price.

Why is it raising funds?

Bubs is understood to be raising the funds for working capital purposes in relation to the immediate scaling up of its activities.

These activities are aiming to increase inventory and to expand its canning capability.

The Bubs share price is expected to return to trade at the commencement of trade on Wednesday.

Motley Fool contributor James Mickleboro 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 BUBS AUST FPO. 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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