Argo Blockchain Shares Plunged 16.9% on Plans To Raise £35M

Key points:
Argo Blockchain shares plunged 16.9% on a new strategy to raise capital.
Investors reacted to the lower price offered to a new strategic investor.
Today’s actions will protect Argo’s finances as Bitcoin prices remain low.

The Argo Blockchain PLC (LON: ARB) share price plunged 16.9% after announcing that it was selling 3,400 Bitcoin mining machines to raise £6.0 million ($6.8m) in gross proceeds. The company also announced plans to raise about £24 million ($27m) via a share subscription with a strategic investor.

The decline in Argo Blockchain’s share price was in reaction to the price offered to the new strategic investor of 27.6p per ordinary share. The new investor agreed to purchase 87 million ordinary shares at 27.6p each for £24 million ($27 million).

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Argo further announced that it had signed a non-binding letter of intent with an affiliate of New York Digital Investment Group LLC (NYDIG) to amend its existing equipment financing agreement. The move frees up £5.0 million ($5.7 million) of restricted cash and changes the amortisation schedule for Argo’s existing loans.

While the strategic moves announced by Argo Blockchain today may not be the most pleasant to investors, we must commend the Bitcoin mining company’s management for taking proactive measures to protect the company from financial distress as it runs out of cash.

Argo’s decisions will see the company raise £35 million, which should cushion it until Bitcoin prices recover. The new strategic investors will have a 15.46% stake in the company’s enlarged share capital and will be entitled to appoint two non-executive directors to Argo’s Board.

Peter Wall, Argo Blockchain’s CEO, said: “We have worked relentlessly to create and execute on a strategy that will support our objective of sustainable growth for the company… Additionally, the sale of the 3,400 Bitmain machines generates cash in the near term, and the Subscription with a major strategic investor strengthens the balance sheet while adding significant expertise in Bitcoin mining and digital asset management to the Board. After careful consideration, we are convinced that taking these steps will better position the company to navigate the current market conditions and preserve shareholder value.”

Today’s announcements will pay off significantly for Argo Blockchain, which could translate into a higher stock price.

*This is not investment advice.

Argo blockchain share price.