A capital increase is set to be carried out by Duro Felguera for the second time in five years, aiming to bolster the company’s solvency. The stock market reaction has been unfavorable, with investors needing to discount the operation as it aligns with the firm’s declared plans and with commitments tied to the 2021 public bailout.
From the moment Tuesday night revealed the plan for two Mexican investors and the capital raise that would permit the company to secure up to 90 million euros through the issue of new shares, Duro Felguera has seen its market value decline. In two trading sessions, the company’s value fell by 10.36%, translating to a market capitalization loss of just over 9.21 million euros.
Mexican groups Prodi and Mota-Engil take control of Duro Felguera for 90 million
Engineering completed the session with a market capitalization of just over 88.89 million euros on Tuesday and finished Wednesday at 79.68 million. The Tuesday drop represented a 5.08% slide in value, moving from 0.926 euros to 0.879 euros per share despite an initial 4% rise during early talks. Another 4.89% decline followed on Wednesday, closing at 0.983 euros.
Corrective
In the absence of additional details, the described transaction is designed to safeguard the group’s solvency and future ventures. It will dilute current shareholders, even if part of the full 90 million is reserved for a possible extension up to 40 million. The market anticipates immediate dilution of existing owners while the benefits from improved results may manifest with a delay.