Flowgroup shares dive on news of potential sigificant capital raise

Shares in domestic energy technology developer Flowgroup have dived more than a third after saying it was in the advanced stages of preparing a potential significant capital fundraising.

This, the company said, would be as a potential alternative to the proposed disposal of the Flow Energy business, as it had previously announced.

While talks with the preferred bidder for the Flow Energy business continued, directors were also in advanced discussions with Flowgroup's manufacturing partner to downsize and reduce its exposure to its microCHP business.

"In addition, the company is in advanced discussions concerning a capital injection into the Group of in excess of £20m, which would be necessary should the proposed disposal of the Flow Energy business not take place."

Flowgroup said that if any such fundraising occurred, it was likely the investment would be made in the form of convertible securities and new equity.

It was expected that the equity issue and convertible security conversion prices would be at 1.5p and 1.8p respectively.

"The Directors intend that a material element of any such fundraising will be made available to existing shareholders of the Company on a pre-emptive basis."

Shareholders would have to approve any such fundraising, the company said.

At 12:37 BST, shares in AIM-listed Flowgroup were down 39.2% to 1.9p each.