Why is the Dicker Data share price down 6% on Wednesday?

The Dicker Data Ltd (ASX: DDR) share price is heading south after coming out of a trading halt today.

At the time of writing, the technology distributor’s shares are swapping hands at $10.76, down 6.27%.

What’s dragging Dicker Data shares down?

Investors are heading for the hills after Dicker Data announced it has completed its $50 million placement.

The company received strong interest from both existing institutional shareholders and new investors. However, the overwhelming demand resulted in an excess of the funds Dicker Data had sought to raise.

Approximately 4.9 million new fully paid ordinary shares will be issued at a price of $10.30 apiece. This represents a 10.3% discount to the last closing price of the company’s shares on 29 August of $11.48.

Proceeds from the placement will be used to fund the expansion of Dicker Data’s Kurnell warehouse, increasing warehouse capacity by over 70%.

The remaining monies will be allocated to the company’s working capital to increase balance sheet flexibility and support its long-term growth plans.

With the new shares expected to settle on 5 September, this will ultimately dilute shareholder value, which is why the share price is falling.

In addition, Dicker Data advised it has launched a share purchase plan (SPP) for retail investors.

The SPP aims to raise up to a further $10 million, and will be issued under the same price as the placement.

The offer is scheduled to open on 7 September and close on 20 September.

Dicker Data said that the SPP may be subject to scalebacks and is not underwritten.

Dicker Data share price review

It’s been a mixed year for Dicker Data shares, moving in circles for most of the 12 months.

Today, however, the company’s shares reached a 52-week low of $7.22 before treading higher as bargain hunters swooped in.

The Dicker Data share price is 15% lower since this time last year, and is down 27% year to date.

The post Why is the Dicker Data share price down 6% on Wednesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has positions in Dicker Data Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dicker Data Limited. The Motley Fool Australia has positions in and has recommended Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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