Property investor Ace Liberty & Stone (LON: ALSP) has launched an open offer to raise £4.56m at 25p a share, which is a 60% discount to the previous market price of the Aquis Stock Exchange-quoted company. However, the share price fell 25.8% to 47.5p, valuing the company at £27.9m.
The open offer closes on 14 November and enables existing shareholders to finance the strategy to buy additional properties. The directors intend to take advantage of being able to apply for more shares than the entitlement by applying for double the number of shares they are entitled to under the open offer.
Ace Liberty & Stone has had a low level of defaults in the past couple of years and sold four properties to reduce debt. The new facility has a higher loan-to-value ratio than previously so there are available funds from the facility as well as the open offer cash.
Management believes that economic uncertainty will provide opportunities to acquire high yielding properties.
Ace Liberty and Stone increased pre-tax profit by 49% to £2.07m in the year to April 2022. Net assets were 6% higher at £34m. Net debt was reduced from £54.8m to £44.6m. A dividend of 3.4p a share cost £2m.
The large discount to the market price is designed to attract further investment from shareholders, although the open offer will be dilutive in the short-term.