That 'if something changes' ordinarily only includes changes which materially affect the underlying business. Underwriters are usually not permitted to pull out of an agreement if the business has stayed the same during the capital raising period, but the share price falls. Just find me one example of another ASX company that's had an underwriter pull out of their capital raising without any changes to the business itself. It's unheard of.
It's worth noting that the announcement that the underwriters pulled out of the capital raising came 9 days before the close of the offer to retail investors. Retail investors acting rationally would wait until the last few days before deciding whether to buy more shares or not, to gauge market reaction to the placement.
No one wants to send in a cheque early to subscribe for shares, only to see the shares tank before the offer closes and realise it could have been avoided if they sent in their cheque later.
On the assumption that most retail investors acted rationally, there should not have been many losses due to retail holders subscribing for overpriced shares.
By allowing the underwriter to pull out, there has been real detriment to the company. Instead of getting $20m from issuing 32m shares at 63c , they've issued 31m shares at 45c raising 14m. Shareholders got roughly $6m less for the same amount of dilution to the company. That's a not insignificant difference.
AU8 Price at posting:
42.5¢ Sentiment: None Disclosure: Not Held
