China Jo-Jo Drugstores Tumbles 49% on $10 Million Direct Offering
Shares of the wholesale pharmaceutical distributor are down more than 60% since last week.
The stock in China Jo-Jo Drugstores, Inc. (Nasdaq: CJJD) plunged nearly 49% to $1.32 per American depositary share on its announcement of an approximately $10 million direct offering.
Under the deal with "several" institutional investors, the wholesale pharmaceutical distributor will issue approximately 5 million common shares at $2.00 apiece, according to the company's statement today. In a private placement, CJJD has agreed to issue the investors unregistered warrants to buy up to 3.75 million shares of common stocks.
The warrants will carry a tenure of five and a half years with an exercise price of $2.60 per share. The warrants will be exercisable six months after the issuance date.
CJJD plans on using the proceeds for general corporate purposes and working capital. The sole placement agent on the offering is H.C. Wainwright & Co.
In the last few days, CJJD has watched its stock collapse. Shares of CJJD are now down more than 60% from Wednesday's close.
Based in Hangzhou, CJJD provides pharmaceutical and healthcare products through offline and online retail channels in China. In addition, the company sells products through e-commerce giants such as Alibaba Group's (NYSE: BABA; HKEX: 9988) Tmall, JD.com Inc. (Nasdaq: JD) and Amazon (Nasdaq: AMZN).
In the three months through December, CJJD reported revenue of $33.36 million, up 8% year-over-year on net income of $460,000. It also reported cash of $11.86 million, as of December.
CJJD said the closing of the sale is expected to take place on or about June 3.