The Energy Resources Of Australia Ltd (ASX: ERA) share price is having a day to forget on Thursday.
In afternoon trade, the ASX All Ords stock has crashed 68% to 6 cents.
What's going on with this ASX All Ords stock?
Investors have been hitting the sell button this week after the uranium developer announced a $369 million renounceable entitlement offer.
According to the release, the company is aiming to raise the funds via a 5 for 1 non-underwritten pro rata renounceable entitlement offer. These funds will be raised at 2 cents per new share, which represents a whopping 90.2% discount to its five-day volume weighted average price of 20 cents.
Proceeds from the entitlement offer are expected to provide the ASX All Ords stock with sufficient cash to fund its planned Ranger Project Area rehabilitation expenditure for the next 12 months, repay the Rio Tinto Ltd (ASX: RIO) credit facility, and fund the costs of the entitlement offer.
The release also notes that Energy Resources Of Australia has secured binding pre-commitments from Rio Tinto, Packer & Co, and Zentree Investments. They have collectively committed to subscribe for $355 million in total.
So why are its shares falling today?
Given that this capital raising was announced earlier this week, investors may be wondering why this ASX All Ords stock is crashing today.
The reason for this is that the offer is renounceable and today is the day that eligible shareholders can see their entitlements. The company explains:
As the Interim Entitlement Offer is renounceable, Eligible Shareholders may sell all or part of their entitlements on ASX at the prevailing market price for the entitlements (provided there is a viable market for entitlements). Entitlements trading commences on Thursday 6 April 2023 (on a deferred settlement basis) or Friday 14 April 2023 (on a normal settlement basis) and ends on Friday 28 April 2023.
