Shares in global uncoated-paper manufacturer Sylvamo Corporation (SLVM 2.22%) slumped by more than 10% today. The move follows the news that the company offered a block trade of 4.6 million shares at a price of $36.25. Last night, the shares closed at $40 but traded today at a level only slightly higher than the offer price.
The share offer is significant. The value of the shares offered comes to almost $167 million. Considering the stock's current market cap of $1.61 billion, this represents slightly more than 10% of the company's current value. Given the weakness in the equity markets in 2022, it might not seem like the best time to offer stock, so the market's reaction is unsurprising.
The offer won't please existing shareholders in the paper company -- particularly retail investors unable to take part in the offer -- as the discounted price of the offer has resulted in a markdown of the share price. Still, management raised its full-year earnings and free cash flow guidance on its second-quarter earnings call. The hike in guidance comes even after Sylvamo committed to selling its Russian operations -- a major paper and pulp mill in Svetogorsk, Russia.
Investors will be hoping the market focuses on some of the underlying positives in the stock while the block trade is absorbed by the market. Until that happens, the stock price could be under pressure.