The Altech Chemicals Ltd (ASX: ATC) share price is having a day to forget today. This comes after the alumina producer announced an update on its recent share placement.
During mid-afternoon trade, Altech Chemicals shares are down 14.29% to 12 cents apiece. In comparison, the All Ordinaries (ASX: XAO) is 0.78% lower to 7,498.9 points.
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What's dragging Altech Chemicals shares lower?
Investors are scrambling to sell the Altech Chemicals share price as the company prepares to dilute existing shareholder value.
According to its release, Altech Chemicals advised it has successfully completed an $8.1 million share placement.
The offer received strong support from an array of investors, picking up Altech Chemicals shares at 10.7 cents each. This represented a 24% discount to the last closing price of 14 cents apiece on 29 November.
In addition, the company will undertake a share purchase plan (SPP) whereby existing shareholders can apply. The terms and conditions of the offer are the same as the placement.
The shares will be issued in a single tranche under the company's listing rule 7.1. In total, 76 million shares will be created and allotted to investor accounts on 23 December.
Proceeds of the placement will be used to accelerate the construction of a battery materials coating pilot plant in Germany. Altech Chemicals is funding 75% of the costs to build the facility.
Furthermore, the remaining monies will be allocated towards a number of smaller initiatives. This includes purchasing land at the Schwarze Pumpe Industrial Park, completing the preliminary feasibility study, and commencing a definitive feasibility study.
About the Altech Chemicals share price
Since this time last year, Altech Chemicals shares have posted a gain of 200%, reflecting positive investor sentiment. The company's share price reached a multi-year high of 15 cents late last month.
On valuation grounds, Altech Chemicals commands a market capitalisation of around $154.70 million, with 1.29 billion shares on issue.
