What happened 

Shares of Scorpio Tankers Inc. (NYSE:STNG) fell as much as 11.4% in early trading on Wednesday after the company announced a big capital raise. At 10:50 a.m. EDT, the stock was still down 11.3% and showed no real signs of recovery. 

So what

After the market closed yesterday, Scorpio Tankers announced a public offering of 162 million shares at a price of $1.85 per share, raising about $300 million. Not surprisingly, the stock fell to about that trading price early in the day today. 

A tanker on open water.

Image source: Getty Images.

As part of the capital raise, Scorpio Bulkers (NYSE:SALT) will invest $100 million in the related company, increasing its stake to 10.9%. 

Now what

Raising money isn't always bad for a company, but when investors see a company raising money at a price below the current stock price, there's reason to be worried. Management only said they would use the funds for general corporate purposes, which could mean almost anything. Right now, that open-ended cash raise at a discount to where shares were trading isn't leaving investors very happy, and that's why Scorpio Tankers is down so much today. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.