The All Ordinaries Index (ASX: XAO) is down 0.2% in morning trade on Friday, and this ASX All Ords share certainly isn't helping the index's performance.
Shares in the crash repair and vehicle accessories company entered a trading halt on 31 August pending a capital raise announcement. The ASX All Ords share closed on 30 August trading for 12 cents.
Following the release of that capital raise announcement this morning, the stock crashed to 6.8 cents, down a painful 43.3%.
Any guesses?
If you said AMA Group Ltd (ASX: AMA) go to the head of the virtual class.
Here's why investors are hitting the sell button.
Why is the AMA Group share price crashing on the capital raise?
The ASX All Ords share is under heavy selling pressure after reporting that all the new shares offered under its equity raising will be issued at a price of 7.5 cents.
That's 37.5% below the AMA Group's closing price on its last day of trading. But it's higher than the current share price of 6.8 cents. Investors may be a bit jittery about the initial debt obligations.
According to the release, "Funds raised under the equity raising will be applied to the principal repayment of $35.0 million of existing senior bank debt."
The remaining funds, AMA said, will "provide liquidity and working capital which will be deployed in pursuit of the group's strategy".
The capital raise consists of a fully underwritten institutional placement and an institutional entitlement offer.
The ASX All Ords share said it had received strong support from both existing and new eligible shareholders, raising a total of approximately $55 million.
Management said that it will issue some 234.2 million new shares to new institutional investors and existing institutional shareholders under the placement at the 7.5 cent offer price.
That consists of an unconditional component to raise approximately $15.3 million through the issue of approximately 204.9 million shares. And a conditional component, which requires shareholder approval, to raise approximately $2.1 million through the issue of some 28.4 million shares.
The placement will be conducted concurrently with the institutional entitlement offer.
How has this ASX All Ords share performed longer-term?
Unfortunately for longer-term shareholders, this isn't the first day of sizeable losses for the AMA share price.
Over the past 12 months, the ASX All Ords share has tumbled 67%.
