- Blue Sky Alternative Investments Limited is refunding part of a equity raising to investors who took up a share purchase plan.
- The price of that share purchase plan was $11.50. Today the company shares are trading at $8.15.
- The company says it would not be “appropriate” to accept applications from shareholders given the disruption from a research note by a short seller.
Blue Sky, the funds manager hit by a brutal research note from a short seller, has decided to withdraw part of an equity capital raising.
Those retail shareholders who bought at $11.50 a share will be refunded. The shares are trading today at $8.16, down 3.6%. Four weeks ago they were at $12.80.
The share price dropped sharply last Wednesday when Glaucus Research announced it was shorting Blue Sky, alleging the funds manager wrongly calculated the value of assets under management and charged exorbitant fees.
Blue Sky shares fell more than 13%, prompting the company to call a trading halt. The shares took another battering when they came back to the market yesterday.
Glaucus alleges Blue Sky is overvalued by the market by as much as 77% and that its assets under management are only worth $1.5 million and not the $4 billion claimed.
Before the Glaucus allegations, Blue Sky on March 7 announced the successful completion of a placement of 8.7 million shares to institutional, professional and sophisticated investors, raising $100 million.
After that raising, the company offered the same $11.50 a share deal to all existing shareholders in a share purchase plan (SPP).
That plan closed on March 28, the same day Blue Sky became aware that an opinion had been published by a short seller.
Today, the Board of Directors announced the company was withdrawing that share purchase plan.
Blue Sky says it has has formally invited the corporate regulator ASIC to investigate its concerns about possible market manipulation.
“In these circumstances, and given the disruption to the market in BLA shares which occurred during the SPP offer period, Blue Sky does not believe it appropriate to accept applications from shareholders,” the company says.
“Accordingly the Blue Sky Board has, in accordance with the terms of the SPP, determined not to issue any new shares in response to the applications received. The Board notes that Blue Sky is well capitalised to deliver its strategy.
“A full refund of application monies will be dispatched shortly.”
The company has not revealed how much was raised in the retail investor part of the equity raising.
Blue Sky says the Glaucus opinion piece is materially misleading and flawed.
“Blue Sky is concerned that the Short Seller and any associates who had engaged in short selling in recent months may have manipulated the market in breach of the Corporations Act,” the company says.