[T]oday announced the pricing of an underwritten public offering of 10,000,000 shares of its common stock for a public offering price of $6.50 per share. The gross proceeds to Tetraphase from this offering are expected to be $65.0 million, before deducting underwriting discounts and commissions and offering expenses payable by Tetraphase. Tetraphase has granted to the underwriters participating in the offering a 30-day option to purchase up to an additional 1,500,000 shares of common stock on the same terms and conditions as the offering. All of the shares of common stock being sold in the offering are to be sold by Tetraphase. The offering is expected to close on or about August 2, 2017, subject to customary closing conditions.
Management indicates the offering was expected to close on August 2nd. Don't they usually announce that it closed? Have we received any indication from management that the offering was closed? It should have been announced if it closed. I suspect it did not close yesterday as expected.
It is my understanding that sometimes management sets the price for a secondary offering (e.g., at $6.50/sh), and then find they cannot attract the funding they need at that price...so they are forced to lower the price. If the price drops precipitously, buyers will claim that the market is saying the offering is overpriced, and demand a lower price claiming they would rather buy at the market than from an overpriced offering.
If traders smell blood in the water at such a secondary offering, it is susceptible to manipulation, and the traders will manipulate the price down to create an opportunity for themselves or their friends to buy into such an offering well below its true value and make some money serious money in the process.
I suspect this has happened to TTPH. It doesn't seem terribly fair or ethical, but this is Wall Street.
The price should still bounce most of the way back IMO. |
