Electro Optic Systems Holdings Ltd (ASX: EOS) shares have returned from their trading halt and are sinking into the red.
At the time of writing, the defence and space company's shares are down 10% to $7.95.
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Why are EOS shares sinking today?
The company's shares are under pressure today after it announced the successful completion of its $150 million fully underwritten institutional placement.
According to the release, the company is issuing approximately 18.8 million new EOS shares to eligible institutional investors at a price of $8.00 per new share. This represents a 9.3% discount to where its shares last traded.
The company advised that the institutional placement was well supported by existing and new institutional investors.
In addition, EOS revealed that it has received a commitment from Generation 5 Holding, which is a related entity of Calidus, a major provider of defence equipment, technology, and services based in Abu Dhabi, United Arab Emirates.
Alongside another institutional investor focused on the defence sector, Generation 5 Holding will subscribe for a total of $40 million of new EOS shares.
Share purchase plan
EOS won't be stopping there. It will now push on with its share purchase plan, which aims to raise a further $25 million from retail shareholders.
However, it notes that it reserves the right to accept applications in excess of the $25 million.
This will be undertaken at the same price as the institutional offer ($8.00 per new share).
Why is it raising funds?
Management advised that the proceeds, along with its loan facility from Washington H. Soul Pattinson and Co Ltd (ASX: SOL), will be used to fund the acquisition of MARSS and increase balance sheet flexibility.
Commenting on its plans, EOS said:
Proceeds from the Institutional Placement, Strategic Placement and the Company's proposed SPP (together, the "Capital Raising"), together with the secured term loan facility provided by Washington H. Soul Pattinson (as previously announced on 12 January 2026), will be used to fund the upfront consideration of the MARSS acquisition, and increase balance sheet flexibility to pursue growth opportunities and execute on strategic initiatives. Following completion of the acquisition, Institutional Placement and Strategic Placement, EOS is expected to have a pro-forma net cash balance of approximately A$235m.
