Ethernity Networks Ltd (AIM:ENET, OTCQB:ENETF) shares dropped 31.25% to 0.0083p after the company announced a heavily dilutive £342,500 fundraising and called an extraordinary general meeting to approve changes to its share capital structure.
The fundraising includes a £160,000 placing of over 711 million new shares at 0.02249p per share – a premium to the previous closing price – and a £182,500 convertible loan note (CLN).
If shareholders approve a reclassification of the share capital to a no-par value structure, the CLN will convert into more than 4.28 billion new shares at a heavily discounted 0.00426p per share.
In total, nearly 5 billion new shares will be issued, representing half of the company’s enlarged share capital. The theoretical average issue price of the fundraising shares is 0.0065p, a 43% discount to the prior closing price.
The funds will be used to meet immediate working capital needs and reduce short-term debt. Ethernity also noted that further funding will likely be required within the next 12 months.
The company said the fundraising supports its revised commercialisation strategy for its ASIC platform and will aid ongoing discussions with potential semiconductor partners.