Why is the Mesoblast share price in a trading halt?

Is Mesoblast raising funds again? Let's find out.

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The Mesoblast Ltd (ASX: MSB) share price is out of action on Friday.

That's because this morning, the heavily shorted biotechnology company requested a trading halt.

Why is the Mesoblast share price in a trading halt?

Unfortunately for shareholders, it appears that Mesoblast has requested the trading halt so that it can undertake yet another capital raising.

The announcement states that Mesoblast "requests a trading halt in its securities effective immediately pending an announcement by the Company in relation to a proposed financing transaction."

It has asked for its shares to be offline until Tuesday 5 December.

What is this proposed financing transaction?

While the terminology might sound like something different, it appears to be just a relatively normal capital raising.

According to the AFR, the company is aiming to raise a total of $97.7 million via a $36.6 million placement and a $61.1 million rights issue on a one-for-four basis.

These funds are reportedly being raised at 30 cents per new share, which represents a 25.9% discount to where the Mesoblast share price finished Thursday's session.

It is also a long way from where its shares were trading in previous capital raisings. In April, the company raised US$40 million at 85 cents per share, and in August 2022 it raised US$45 million at 75 cents per share.

Anyone taking part in those capital raisings will have seen the value of their investments almost halve as Mesoblast struggles to gain approval for its stem cell therapies and burns through cash like it is kindling.

The Mesoblast share price is down 64% over the last 12 months.

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 no position in any of the stocks mentioned. 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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