Shares in would be UK fracker, AJ Lucas Group copped a hiding yesterday, plunging 25.5% to 6.7 cents at the close after it revealed a huge shortfall from shareholders to its latest fundraising.
The company told the ASX that it had only raised around 70% of of the money it wanted from institutional shareholders and is now looking to raise up to $8.1 million from its retail shareholders.
It was hoping to raise $46.3 million by issuing new shares, but instead raised $26.2 million.
Major shareholder, The Kerogen company, which already owns a 51% stake in AJ Lucas and holds about $76.5 million of its debt, provided most of that – investing $24.7 million.
AJ Lucas does not have many institutional shareholders on its registry. It offered shares at 6.5¢, a discount on the previous closing price of 9¢. Other institutional shareholders invested just $1.5 million of the offer.
The company said entitlements not taken up in the Institutional Entitlement Offer will be made available to Eligible Retail Shareholders who will have the ability to apply for additional shares by way of over-allocation during the Retail Entitlement Offer. The issue opens on Thursday, November 14 and closes on November 27.
The Company said it reserves the right to place the subsequent shortfall following the end of the Offer to provide additional funds for the purposes outlined in the Offer Documents.
AJ Lucas says it will use the money to fund testing of its gas fracking project in the UK but the British government recently place a moratorium on fracking, which has stopped activity at the Cuadrilla prospect partly owned by AJ Lucas.