Farmmi Inc. (NASDAQ: FAMI) stock declined by 54.74% at last close while the FAMI stock price gains by 14.11% in the pre-market, at last check, thanks to bargain hunters. Farmmi with its headquarters in Lishui, Zhejiang is a well-known distributor of agricultural products. FAMI is famous for being the processor and seller of Shiitake mushrooms, Mu Er mushrooms including many other edible fungi and agricultural products. Farmmi’s business model is primarily based on the Chinese mushroom market, though it also sells a variety of other agricultural products.
What is happening?
On April 28, 2021 Farmmi, a Chinese agricultural products supplier, revealed the pricing of an upsized underwritten public offering with net amount to FAMI projected to be around $42.0 million without underwriting discounts and commissions, as well as other projected offering costs payable by FAMI. The public offering entails the sale of 140,000,000 ordinary shares of FAMI at a price of $0.30 per share. The net proceeds from this offering will be used by Farmmi for working capital and general corporate purposes. Subject to customary closing conditions, the offering is scheduled to close on May 3, 2021.
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With this Farmmi has also given the underwriter a 45-day offer to acquire up to 15% of the amount of ordinary shares issued in the public offering to meet over-allotments in case there are any, eventually bringing the overall net proceeds of the offering to nearly $48.3 million if the over-allotment option is fully exercised. Aegis Capital Corp. is acting as the offering’s only book-running manager.
Farmmi stock is rebounding from yesterday’s plunge on news of a much larger public offering. The overall Chinese stock market was also showing weakness on April 29, 2021 which also may have contributed negativity surrounding FAMI stock.