The news about a success private placement of a company’s common share can often be a source of unease for investors since it may involve the issuance of new shares.
Hence, it was no surprise that the Cyren Ltd (NASDAQ:CYRN) stock tanked yesterday after the company announced that it completed a private placement in which it issued 14,152,779 ordinary shares in addition to warrants that could help in buying up 14,152,779 shares. The private placement was done as per the at the market rules as specified by the NASDAQ rules. The company sold the shares at $0.72 each.
However, the news was not welcomed with any kind of enthusiasm by investors and the Cyren stock actually nosedived by as much as 16% as a consequence. Issuance of new shares usually implies further dilution of shares and hence, it may often lead to a selloff from investors.
The warrants issued by the company have a term of three and a half year and the warrant holders will have the option of exchanging their warrants for shares immediately. The exercise price for an ordinary share when exchanging it with a warrant has been set at $0.60 for each ordinary share.
