What happened
Shares of Ondas Holdings (NASDAQ: ONDS) collapsed today and fell 13% from 12:05 pm EDT on Wednesday after the company assessed a secondary offering of shares. The deal, which was announced yesterday, was valued at a significant discount from market prices.
So what
waves, technology company , which operates a software-defined radio platform, sold 6.4 million shares at a price of $ 7 per share, a 22% discount from yesterday’s closing price. The deal will raise $ 44.8 million in gross cash proceeds for Ondas, which intends to use the money for working capital and general corporate purposes. Secondary offers are usually valued at a discount to attract investors to buy shares through a deal rather than the open market, but investors may be disappointed with the size of the discount.
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In addition, the deal is significantly distracting for existing shareholders. There were about 26.7 million shares outstanding before the offering, so the sale of 6.4 million newly issued shares became about a 24% dilution. In addition, insurers have the opportunity to buy an additional 960,000 shares, which would further erode existing investors.
Now what
The proposal will strengthen the company’s balance sheet as Ondas ended the first quarter with about $ 24 million in cash. The forecast for the second quarter requires revenue of $ 1 to $ 1. To see also : Finland’s Digita Taps Nevion to Construct Nationwide IP Media Network.5 million, with operating expenses expected to be $ 2.5 to $ 3 million on a cash basis.
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