TPG Telecom shares were smashed

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Shares in TPG Telecom fell hard when they came out of a trading halt.

At the close, they were down 17.4% to $5.50.

The telco announced it had raised $320 million of the total $400 million institutional component of a capital raising with support from major shareholders including chairman David Teoh and Washington H. Soul Pattinson.

The offer now goes to retail investors.

The raising at $5.25 a share is part of a plan for TPG to become Australia’s fourth mobile carrier at a cost about $1.9 billion.

The company last week announced a winning a bid for spectrum in the 700MHz band at an auction by the Australian Communications and Media Authority.

The project will be funded through a combination of cash flow and new debt.