Urban Tea Announces Registered Direct Offering; Shares Tank 28%
Urban Tea, Inc. (Nasdaq: MYT) announced Thursday that it has entered into a securities purchase agreement with certain accredited investors to sell $6 million of its ordinary shares in a registered direct offering, sending its shares down nearly 28% to 43 cents by midday.
The retailer of specialty teas and baked goods said it will sell 15 million of its ordinary shares at 40 cents apiece. Maxim Group LLC acted as sole placement agent for the offering.
The gross proceeds to Urban Tea are estimated at $6 million before deducting the placement agent fees and other estimated expenses. The registered direct offering is expected to close on or about August 3, subject to the satisfaction of customary closing conditions, the company added.
According to Matthew Galbraith, an analyst at Forster Research, since August 2 of 2019, the stock of Urban Tea has traded to a low of 25 cents at 137.96%, an encouraging piece of data likely to interest most investors out to exploit the stock's recent surge.
On July 25, Urban Tea tumbled 36% after beginning a $5 million private placement of 9 million ordinary shares at 56 cents apiece, representing a 49.5% discount to Wednesday's closing price.
The company reported its new store "Meno" and is prepared to open as its first overseas store in New York City last month, and it received approval from the Commercial Franchise Enterprise Administration in May and was approved to seek franchisees for growth opportunities throughout China.
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