Vulcan Energy Resources Ltd (ASX: VUL) shares have returned from their trading halt on Thursday with a thud.
In morning trade, the lithium developer's shares are down 33% to $4.11.
Why are Vulcan shares crashing?
Investors have been selling the company's shares today after it completed a major capital raising.
According to the release, Vulcan has successfully completed its fully underwritten institutional placement and fully underwritten institutional entitlement offer.
The institutional offer raised 398 million euros (A$710 million) from the issue of ~178 million new shares at $4.00 per new share. This represents a sizeable 34.7% discount to its last close price.
The company notes that the institutional offer received strong support, with existing eligible institutional shareholders subscribing for approximately 23.2 million new shares. In addition, a number of new local and global institutions took part in the offer.
The proceeds from the offer will be applied to the Phase One Lionheart development.
Vulcan's managing director and CEO, Cris Moreno, commented:
We would like to thank our existing shareholders for their continued support and welcome our new shareholders onto the register, including strategic investors. "The Placement will enable Vulcan to transition from development phase into execution phase with project execution of Project Lionheart due to commence in the coming days.
This is a lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe's first fully domestic and sustainable lithium value chain. We look forward to providing further updates to our shareholders on the start of construction activities.
Finance package
Today's institutional placement and entitlement offer complement the major finance package that Vulcan announced on Wednesday following the board's positive final investment decision (FID) on the project.
It revealed a financing package, inclusive of its capital raising, worth approximately 2,200 million euros (A$3,929 million).
The bulk of this comes from a 1,185 million euros (A$2,116 million) senior debt funding package by a syndicate of 13 financial institutions. This comprises the European Investment Bank, five export credit agencies, and seven commercial banks.
There are also German government grants totalling 204 million euros (A$364 million) and a 133 million euros (A$238 million) investment from a consortium for a 15% equity interest in the Phase One Lionheart Project.
CEO Cris Moreno commented:
Securing this financing package and taking a positive FID is a significant achievement in the history of Vulcan Energy. It will allow the Company to transition from development phase into execution phase with the construction of the commercial scale supply chain for Lionheart.
A lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe's first fully domestic and sustainable lithium value chain. It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany's Upper Rhine Valley.
