Shares of Materialise NV (NASDAQ: MTLS) crashed 17.1% as of 11:20 a.m. EDT today, after the Belgian maker of software for 3D printers announced that it will be raising cash by selling at least 4 million American depositary shares (ADS), and perhaps as many as 4.6 million, at the price of $24 each.
Each Materialise ADS represents one single share of domestic common stock in Belgium, so the valuation on this one is pretty easy: 1-to-1.
Therefore, 4.6 million ADS sold could raise as much as $110 million in gross proceeds (before fees and costs) for the company — almost enough to entirely pay off its debt. That’s the good news.
The bad news is that putting 4.6 million new shares on the market could dilute existing shareholders by about 7.9%, based on the latest shares outstanding data provided by S&P Global Market Intelligence.
Of course, the other bad news is the price Materialise is charging for these new, dilutive shares — $24. That’s a big 14.3% discount from the stock’s closing share price yesterday. Viewed in combination with the dilution, it’s probably the reason Materialise stock is down so much today.