Why did this ASX 300 tech share just crash 50%?

This tech share is having a day to forget on Tuesday.

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Key points
  • Bravura has completed a heavily discounted capital raising on Tuesday
  • The company is raising funds while it resets its business
  • Bravura also released its half-year results and revealed a big loss

The Bravura Solutions Ltd (ASX: BVS) share price has returned from its trading halt and crashed deep into the red.

In afternoon trade, the ASX 300 wealth management software solutions company's shares are down 54% to 39 cents.

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Image source: Getty Images

Why is this ASX 300 tech share being sold off?

Investors have been hitting the sell button today after the ASX 300 tech share completed a placement and institutional entitlement offer.

According to the release, the company raised a total of $66 million from investors. This comprises $43 million under the institutional entitlement offer and $23 million under the placement.

These funds were raised at $0.40 per new share, which represents a 53% discount to the Bravura share price prior to the halt.

Encouragingly, management notes that the placement and entitlement offer saw strong support from both existing shareholders and new investors. This led to the latter commanding a take up rate of approximately 85%.

Combined with its new debt facilities, management believes it is well-positioned to fund investment in its operational change program, fund negative cashflow and transaction costs, and provide balance sheet flexibility and working capital.

Bravura's CEO, Libby Roy, commented:

We are very pleased with the success of the Institutional Offer and the strong support shown by both our existing institutional shareholders and the broader investment community. The Board and management team are excited by Bravura's future and proceeds of the Offer will provide additional balance sheet flexibility to support our restructure.

Bravura will now seek to raise a further $17 million from retail shareholders.

Results update

The ASX 300 tech share also released its half-year results while it was in its trading halt.

These results go some way to explaining why Bravura needed to raise capital today. Here's a summary:

  • Revenue down 11% to $118 million
  • Total expenses up 17% to $125 million
  • Total non‐cash impairment of $176 million
  • Net loss of $190.9 million
  • Adjusted net loss of $14.2 million

Roy commented:

The first half was undoubtedly a difficult period with our performance impacted by a number of operational and market‐related challenges. However, after conducting a wide‐ranging strategic review of our business and having taken some tough but necessary decisions, I believe we now have a plan in place that will allow us to better manage and monetise our suite of high‐quality, mission‐critical products and build on our strong customer base. I am confident in the team's ability to execute on this plan and achieve our targets of delivering an estimated $25‐30m in annualised cost benefits once fully implemented.

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 positions in and has recommended Bravura Solutions. The Motley Fool Australia has positions in and has recommended Bravura Solutions. 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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