Pinned straw:
A total of 28,044,096 fully paid ordinary shares New Shares will be issued to SPP applicants at an issue price of $0.89 per New Share. The New Shares issued will represent 8.1% of 4DMedical’s issued capital and will rank equally with existing shares on issue from their date of issue.
The New Shares issued under the SPP are expected to be allotted on Wednesday, 31 May 2023 and are
expected to commence trading on ASX on Thursday, 1 June 2023. The total funds raised, comprising the Placement ($20m) and SPP ($25m), amount to $45m (before costs).
Proceeds raised under the Placement and SPP will be used primarily to accelerate commercialisation of 4DMedical's respiratory imaging software and significantly strengthen the Company's balance sheet. Funds raised leave the Company with a cash balance of approximately $79.6m after costs as at 31 March 2023 on a proforma basis
@raymon68 merely reposting the ASX announcement adds no value and should be discouraged on Strawman. Instead, pick out some relevant bits and add your analysis, commentary and personal experience. Quote the relevant bits or add a link, ideally to the official ASX pdf like this: https://announcements.asx.com.au/asxpdf/20230529/pdf/05q4cx7jgzmxfq.pdf which you can search here: Announcements - Search - ASX.
OK rant over, here's my take:
tldr; good for the company, bad for the share price
The SPP was targeted to raise $15M, as per the original prospectus, but they actually took $25M. "The Company received valid applications for $25m worth of shares under the SPP; in recognition of the long-term support of its investors and to maximise growth opportunities the Board has exercised its discretion under the terms of the SPP and determined not to scale back applications." (Typical bullshit justifying a money grab).
This is a more significant dilution than the market was expecting and will pull down the SP. Also, the price, 89c, was less than the 91c that "professional and sophisticated" investors paid in the placement. There will be many smaller shareholders that sent off $30k expecting to be scaled back or expecting to make a small profit. For many, this is a larger holding in 4DX than they want, and they will be selling over the next month or two. Many will not want to book a capital gain on their existing shares so they will wait until Thursday 1st June to sell, or hang on longer, hoping for a better price. This overhang will weigh on the SP for months.
The placement shares were issued a while back. (I sold mine for a small profit, anticipating this) and kept the options.
The options create a second cap to the future share price. Every subscriber in the placement and SPP got 1 option for every 2 shares: ex $1.365 Dec 31 2024. These are not listed (but may be later). 4DX is hoping that future developments will raise their price and the resulting option exercise will bring in an additional $34m in cash but this would be a further dilution. Company options like this are not included in the market capitalisation but they have value, and it is value that should be subtracted from the regular shares. (It steals some of the upside.)