Why is the Mesoblast Share Price in a Trading Halt?

December 01, 2023 03:25 PM AEDT | By Team Kalkine Media

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Why is the Mesoblast Share Price in a Trading Halt? — Image source: shutterstock

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The Mesoblast Ltd (ASX:MSB) share price is currently in a trading halt as the biotechnology company plans to undertake another capital raising. The trading halt is expected to remain in effect until Tuesday, December 5, pending an announcement related to the proposed financing transaction. This development adds to the ongoing dynamics within ASX healthcare stocks, underlining the sector's propensity for strategic financial moves to support biotechnology endeavors. Investors will keenly await further details regarding Mesoblast's capital raising and its implications for the company's future initiatives.

The company aims to raise approximately $97.7 million through a $36.6 million placement and a $61.1 million rights issue on a one-for-four basis. The pricing of the new shares is set at 30 cents per share, representing a 25.9% discount compared to the closing price of ASX MSB shares on Thursday.

This capital raising comes as Mesoblast faces challenges in gaining approval for its stem cell therapies, and it reflects the company's efforts to secure additional funds to support its operations. The proposed financing transaction indicates a significant discount compared to the prices in previous capital raisings conducted by the company.

Investors participating in Mesoblast's earlier capital raisings in April and August 2022 witnessed a substantial decline in the value of their investments as the company encounters obstacles in obtaining approvals and utilizes its cash reserves.

Over the past 12 months, the Mesoblast share price has experienced a notable decline, falling by 64%. The challenges and uncertainties surrounding the company's stem cell therapies have contributed to its struggles in the market.

As Mesoblast navigates through its current financial activities, investors and market participants are likely to closely monitor the developments and announcements related to the proposed financing transaction. The outcome of this capital raising will play a crucial role in shaping the company's financial position and future prospects.

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