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Investing.com -- Tian Ruixiang Holdings Ltd (NASDAQ:TIRX) stock tumbled 38.3% on Friday after the company announced a registered direct offering that would significantly dilute existing shareholders.
The Chinese insurance broker revealed it has entered into a securities purchase agreement with certain institutional investors to sell 2,000,000 Class A ordinary shares and warrants to purchase up to an additional 4,000,000 Class A ordinary shares. The combined purchase price is set at $1.50 per share and accompanying warrants, generating gross proceeds of approximately $3 million before deducting fees and other expenses.
The warrants will have an exercise price of $1.50 per share, will be exercisable immediately upon issuance, and will expire five years after the initial exercise date. The offering is expected to close around October 14, 2025, subject to customary closing conditions.
Tian Ruixiang indicated that it plans to use the net proceeds from the offering for working capital and general corporate purposes. The significant stock decline reflects investor concerns about the dilutive effect of the offering on existing shareholders.
The registered direct offering comes as the company seeks to strengthen its financial position, though the market reaction suggests investors are wary of the potential impact on share value. If all warrants are eventually exercised, the company would issue a total of 6,000,000 new Class A ordinary shares.
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