The Blackmores Limited (ASX: BKL) share price has returned from its trading halt and is pushing higher.
At the time of writing the health supplements company’s shares are up 2% to $80.50.
Why was Blackmores in a trading halt?
Blackmores requested a trading halt on Wednesday while it undertook a capital raising which aimed to raise up to $117 million.
These funds were being raised to strengthen its balance sheet and liquidity position, support its activities in the Asia market, and invest in its efficiency program.
This morning the company revealed that it has successfully completed the $92 million fully underwritten institutional placement component of the capital raising.
Blackmores has issued approximately 1.3 million new shares to institutional investors at a price of $72.50 per share. This represented an 8% discount to its last close price.
The company revealed that the placement generated significant interest from existing institutional shareholders and other institutional investors.
Blackmores Chief Executive Officer, Alastair Symington, commented: “We are pleased with the demonstration of support shown by our institutional shareholders and other institutional investors for the Placement. We believe our capital management initiatives put us in a position of strength to focus on our strategic priorities and help us achieve our objective of returning Blackmores to sustainable, profitable growth.”
The company will now push on with its share purchase plan. This aims to raise a further $25 million. Eligible shareholders can apply for up to $30,000 of new shares.
Trading update.
In case you missed it, on Wednesday the company also provided the market with an update on its performance during the pandemic.
While Blackmores has experienced a material increase in demand for its immunity products, this has been offset by weakness in other areas of the business.
Nevertheless, the company remains on track to achieve its guidance for FY 2020. It expects underlying net profit after tax to be $17 million to $21 million this year.
Although this will be a massive year on year decline, management appears optimistic that better days are coming thanks to this capital raising.
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More reading
- 5 things to watch on the ASX 200 on Thursday
- ASX 200 edges down, bank share prices fly
- Why the Blackmores share price is in a trading halt
- 2 quality ASX shares to buy for long-term growth
- ASX shares and investing trends that could boom post COVID-19
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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