Company's shares fall 11% Friday
Shares of Mercator Minerals (TSX: T.ML, Stock Forum) fell more than 11% to 75 cents Friday after the company announced bought deal financing worth $20 million.
The company entered into an agreement with a syndicate of underwriters led by Blackmont Capital where the underwriters will purchase over 28 million units of the company at 70 cents per unit on a bought deal basis for gross proceeds of $20 million, upsized from $15 million announced earlier as a result of “strong investor demand.”
The company says it has also granted the underwriters an option to purchase up to an additional 15% of the units at the issue price for additional gross proceeds of up to $3 million. The offering is expected to close around January 29.
Mercator notes that net proceeds of the issue will be used for capital expenditures at its Mineral Park Mine and for general corporate and working capital purposes.
On the company’s Bullboard Friday, Stockhouse member brendelly said: “Fairly significant dilution, goes to show you that the economic situation eventually catches up to everyone...cash has been an issue, this solves the problem but at an ugly cost[sic].”
Meanwhile, Investor0072 noted:
Someone took over 25 % of the company for 0.70, that's terrible for existing shareholders "expectations on leverage". At the same time if someone wants 25 million shares at 0.70, they believe it will go a lot higher and they're probably well informed before doing the deal. You don't buy this amount of shares to sell them @ 1, it would be hard to do to distribute such amount of shares for a lousy profit. Normally they buy to sell it a lot higher. Conclusion: Terrible for the leverage but excellent for the future. Wish it was different but the big guys are buying at 0.70, so it's a strong buy at this moment. Just unfortunate the leverage goes down now[sic].
