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What: Shares of Chinese chemical producer ShengdaTech (Nasdaq: SDTH) took a dive today, shedding as much as 19% in intraday trading after the company announced a new debt offering.

So what: The company announced today that it will offer $90 million in new senior convertible notes that will be due in 2015, and it will give purchasers the option of picking up an additional $30 million of the notes. ShengdaTech said it plans to use $62 million of the cash from the notes to pay down its existing convertible notes and put the rest towards capacity expansion and other operating expenses.

Now what: Investors are likely getting riled up today because the transaction appears to be a bit of a head-scratcher. As of the company's most recent balance sheet, it had $120 million in cash, so there doesn't appear to be a pressing need to issue new debt unless current and future cash flow is expected to be tight. What investors should keep an eye on though is how the notes are priced -- if the company saw an opportunity to raise money at a low price, this may have been a worthwhile move that allows it to pay off current obligations and maintain significant liquidity on its balance sheet.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool’s disclosure policy assures you no Wookiees were harmed in the making of this article.