Recon Technology, Ltd. (RCON) stock prices plummeted by a significant 19.31% shortly after market trading commenced on June 14th 2021, bringing the price per share down to USD$5.03 early on in the trading day.
Registered Direct Offering
June 14th, 2021 saw the company announce having entered into a securities purchase agreement with various accredited investors. The agreement will see the purchasing of USD$55 million worth of the company’s class A ordinary shares in a registered direct offering. Pre-funded warrants to purchase Class A ordinary shares may be issued in lieu of the shares themselves, with the class A ordinary shares warrants being issues in a concurrent private placement.
Size of Offering
As per the agreement, the company has agreed to sell a total of 8,814,102 Class A ordinary shares, or pre-funded warrants in lieu thereof. Concurrently, warrants for the purchase of 8,814,102 class A ordinary shares will be offered in a private placement transaction. The pre-funded warrants will have a set exercise price of USD$0.01 per share, with the option of immediate exercising upon the date of issuance until they are exercised in full.
Pre-Funded Warrants
The pre-funded warrants will be issued to certain investors who will have elected to purchase them instead of the Class A ordinary shares up for sale in the offering. This is because the investors would otherwise have surpassed 9.99% beneficial ownership of the company’s Class A ordinary shares immediately after the offering.
Pricing of Offering
Ordinary share warrants will be exercisable instantly as of the date of issuance, with a set exercise price of USD$6.24. The warrants for ordinary shares will expire in five and a half years from the date of issuance. The purchase price for one unit comprised of one ordinary share and one corresponding ordinary share warrant will also be USD$6.24. Gross proceeds generated from the offering are expected to be USD$55 million before the deduction of expenses related to the offering. Subject to customary closing conditions, the registered direct offering is expected to close around June 15th, 2021.
Future Outlook for RCON
Armed with a solid liquidity position from their private placement, RCON is poised to capitalize on the opportunities presented to it. The company is keen to continue its trajectory of success and usher inorganic growth over the long term. Current and potential investors are hopeful that the management will leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
