Yet, as Freddie Mercury once said, the show must go on.
The era of cheap money is well and truly behind us.
Nobody understands this more than the UK small caps, who are finding it increasingly harder and pricier when approaching the market for much-needed working capital.
The show must go on: Small caps are finding it increasingly difficult to raise the capital they need
MGC Pharmaceuticals followed this advice this Friday, when it raised £700,000 through the issuance of new shares at 0.12p a pop.
This amounted to a 57 per cent discount on Thursday’s closing price. As you might expect, MGC’s share price dipped 57 per cent.
Versarien also followed Freddie’s advice this Friday. The advanced materials group raised £650,000 through a placing of shares at 1p apiece.
This amounted to a 40 per cent discount on Thursday’s closing price. As you might expect, Versarien’s share price dipped (nearly) 40 per cent.
If anything, it’s a vindication of MGC’s and Versarien’s fundamentals that investors are willing to stump up cash in these trying times… for a neat haircut of course.
But it wasn’t all about discounts on the junior market.
Financial services firm STM Group announced on Tuesday that it has reached a cash takeover agreement with Pension SuperFund Capital.
Under the offer, STM’s share price was valued at 70p; a whopping 162 per cent premium on Monday’s closing price.
STM shares doubled following the announcement, and though they retracted a bit as the week progressed, still closed Friday more than 76 per cent higher.
It was a bullish week in general for the AIM All-Share Index. Though not faring as well as the FTSE 100 blue-chip index, the junior market added 1.3 per cent to close the week at 751.64.
This was a marked improvement to the sizeable losses racked up over the last few weeks.
Equities were buoyed by a steep fall in consumer price inflation across the Atlantic.
Closer to home, UK gross domestic product contracted 0.4 per cent year-on-year in May, according to Thursday’s data read. Sobering news no doubt, but still significantly better than the 0.7 per cent economic contraction predicted by analysts.
Helium One Global took pole position in the heavy industries, with shares soaring more than 70 per cent across the weekly period, and for good reason.
The explorer seized control of its own drilling destiny in Tanzania, as it opted to acquire its own rig rather than see its timeline stall without a contractor.
Helium One expects to start drilling a well at the Tai project before the end of the third quarter, thanks to the deal.
Deltic Energy came a close second after unveiling a major upgrade to resources estimates for the Shell-operated Pensacola discovery in the North Sea, of which Deltic owns 30 per cent.
Deltic shares ratcheted up 69 per cent as a result.
Other strong energy performers included Amte Power adding 30 per cent, Empyrean Energy adding 24 per cent, and Coro Energy adding 22 per cent.
Much of the market downside was relegated to the fashion and media sectors.
Unbound Group’s shares tumbled a further 60 per cent after announcing a possible administration. Hardly surprising given the shoe retailer failed to attract a buyer after putting itself up for sale earlier this year.
Unbound said that declaring possible insolvency would be dependent on ongoing discussions to implement a formal restructuring plan or raise equity funding.
ZOO Digital Group saw its shares plummet more than 36 per cent to 74p after the provider of cloud and media services to the entertainment industry revealed that an accounting error meant it made less profit last year.
It’s not just accounting errors sending Zoo lower though. In Friday’s trading update, the group downgraded its revenue guidance for two key reasons: Cost-saving measures being implemented by its streaming clients, and fallout from the ongoing Writers Guild of America strike.
Elsewhere on AIM, Fiinu shares plummeted 69 per cent to 2.15p after the ‘Plugin Overdraft’ company said it has still not re-applied for a banking licence as it cannot raise enough funding.
Health service provider Totally, lost 20 per cent of its value this week after it warned revenue and underlying profits for the upcoming financial year would be lower than the previous twelve months.
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