- Locality Planning Energy (LPE) shares have slid on news of a fresh capital raise
- Today, the Aussie electricity provider announced it's looking to add up to $4 million to its bank balance via a placement and share purchase plan
- The majority of the funding will come from a share placement, which the company is using to get "new and unrelated" stakeholders invested in the LPE story
- Meanwhile, eligible shareholders will have the chance to subscribe for up to $30,000 in shares to raise an extra $1 million
- The news is likely no surprise to LPE shareholders, who became aware of the upcoming raise on the same day the company released its latest quarterly report
- However, investors dragged the company's share price into the red on the back of today's news
- LPE shares closed 15.2 per cent down on Wednesday, trading for 28 cents
Locality Planning Energy (LPE) shares have slid on news of a fresh capital raise.
Today, the Aussie electricity provider announced it's looking to add up to $4 million to its bank balance via a placement and share purchase plan.
LPE says its placement has already received strong commitments from a variety of investors to raise $3 million. Under the offer, 12 million fully paid ordinary shares will be issued at 25 cents a pop.
It's a weighty 24.5 per cent discount to LPE's closing price on July 30 — the day before company shares got locking up in a trading halt as it finalised the capital raise.
As it looked for investors to fund the placement, LPE says it took care to spread the net wide. The company tapped "new and unrelated" qualified, institutional, sophisticated, and professional investors in a bid to widen the current ownership pool.
It seems the search was fruitful; LPE had to scale back share applications. As a result, directors and senior management opted not to participate in the company's latest raise.
At this stage, placement shares should be issued by August 10.
Share purchase plan
While the placement offers new investors the chance to get some skin in the game, LPE is also providing existing eligible stakeholders a chance to take part in the raise.
Shareholders can subscribe for up to $30,000 in LPE shares — also priced at 25 cents each.
If demand goes above and beyond the $1 million in shares on offer, the company will scale-back operations on a pro-rata basis — meaning the portion investors take from this latest offering will be calculated based on their current shareholding.
The plan opens on August 1, closes August 28, and results will be released on September 2. All the shares released under the offer will be issued on September 7.
The news is likely no surprise to LPE shareholders, who became aware of the upcoming raise on the same day the company released its latest quarterly report.
So why has its share price dropped?
Why the slide?
The company's fourth-quarter figures show a slump in customer receipts — down from $11.9 million in quarter three to $11.2 million in quarter four.
Taking away production costs, it means LPE made just over $1.8 million; not enough to cover over $2.3 million in staff, admin and corporate expenses.
The only thing bringing LPE's operational balance sheet into the black last quarter was a $3.5 million ticket for COVID-19 electricity relief from the Australian Government. However, without that payment, LPE's quarterly cash flow would be around $780,000 in the red.
Now, with over $8.2 million in reserves, LPE is looking to investors for a boost to its bank balance as it continues to grow its customer base.
"As the business environment adapts to the new norm, we have targeted healthy growth in FY21 and with improved business scale we anticipate having a clear pathway to sustainable profitability over the near-term. These are exciting times for the company and our shareholders,” LPE Chair Justin Pettett said.
Despite the board's enthusiasm, investors dragged the company's share price into the red on the back of today's news. LPE shares closed 15.2 per cent down on Wednesday, trading for 28 cents in a $16.65 million market cap.