Why Sky and Space Global Share Price Plummeted 42.5% Today

Former gas and petroleum explore turned satellite company, Sky and Space Global Limited [ASX:SAS] has seen its share price decimated on its first day trading on the ASX since 4 February.

Since trading begun, SAS’s share price has plummeted 42.59%, wiping off 2.3 cents to trade at 3.1 cents per share.

Sky and Space is a satellite company with European and Israeli centres of aerospace, satellite and software industry experts.

The company’s core business is to operate a communications infrastructure based on nanosatellite technology, and develop highly sophisticated software systems that will deploy, maintain orbit control and handle the communication network in space to provide a global coverage.

What’s happened Sky and Space Global share price?

SAS entered into a trading halt at the beginning of this month and notified investors the company would remain in voluntary suspension on 6 February while it finalised details in respect to capital raising.

This morning the company announced its reinstatement to official quotation along with the completion of Tranche 1 of $12 million share placement.

The issue is for the placement of 260.5 million ordinary shares at a price of three cents per share, which will raise $7.8 million. The outstanding balance will be raised in Tranche 2.

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The company also plans to conduct a fully Underwritten Priority Offer to raise a further $3 million, with the ability to accept up to $1 million of oversubscriptions on the same terms.

The capital raising scheme seems to have been the cause for the freefall this morning, sending the share price close to the value indicated in the share placement.

What’s next for SAS 2019 outlook?

The capital raising comes at a time where SAS is looking to launch their first lot of satellites. CEO Meir Moalem said the company expects to start generating revenue soon.

We have undertaken this raise at a pivotal time for the Company, as we prepare to launch our first batch of Pearls nano-satellites into space, and following this, start generating revenue from our existing customers through the binding signed contracts that we already have in place.’

Sky and Space Global board of directors are said to have participated in the placement with the investment of $710,000, as well as the new Chairman Michael Malone who will invest $400,000.

The company said placement proceeds will be used mainly for capex payments to suppliers, completion of first Pearl launch activities, for operational working capital and for general administration costs.

The launch of the first batch on nano-satellites are expected to take place mid-2019, with the completion of orbital testing expected in August 2019.

Sky and Space Global’s Pearl nano-satellites will begin operational commercial service by September 2019, with commercial revenues generated by late 2019.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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