It was another horrid day for the Australian share market this Wednesday. At market close, the S&P/ASX All Ordinaries Index (ASX: XAO) plunged down by 1.24%, leaving the index at 8,002.60 points. But let's talk about one ASX All Ords defence stock that fared even worse than that.
This ASX All Ords defence stock has been in a trading halt for the past few days. But this morning, its shares returned to trading. And boy, did it get a homecoming to forget.
This ASX All Ords defence stock is none other than shipbuilding company Austal Ltd (ASX: ASB).
Yesterday, Austal announced a share trading halt so that it could conduct a capital raising program. This capital raise aims to net Austal up to $200 million via an institutional share placement, with another $20 million from an ordinary share purchase plan.
Eligible investors were able to subscribe for new Austal shares at a price of $3.80 each. As the company noted, that was a 15.6% discount to the $4.50 share price Austal closed at on Monday, 10 March.
The ASX All Ords defence stock intends to use this fresh capital to invest in its American 'Final Assembly 2' (FA2) plant in Mobile, Alabama.
Specifically, Austal intends to expand the infrastructure at its facility, including a new assembly bay, new ship lift systems, and waterfront improvements.
However, investors do not seem enticed by this development, to say the least.
Upon resumption of trade this morning, Austal shares opened at $3.98 each before closing at $3.51 this afternoon. That price is where the ASX All Ords defence stock is currently trading, down a whopping 22% from where the company closed at on Monday.
This is despite Austal confirming to the market that its institutional placement was successful and raised the required $200 million. That's at the cost of 52.6 million newly issued shares.
Investors who just picked up shares at $3.80 as part of this capital raise would probably be feeling a little miffed right now.
To be fair, the timing of this capital raise is arguably rather unfortunate, given the big sell-downs we have seen on the broader market over last week and this week thus far.
Even so, long-term Austal investors can't complain too much. Even after today's precipitous drop, this ASX All Ords defence stock remains up a healthy 13% year to date. It also remains up a pleasing 57% over the past 12 months.
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