ELLIES Holdings shares plunged as much as 21% on Tuesday following a weak trading update and the announcement of a rights issue.
Ellies, which offers a range of products such as satellite TV products, expects a headline loss per share in the year to April to be more than 66c from headline earnings per share of 23.46c.
The company said difficult trading conditions, severe liquidity constraints and significant interest charges had affected its performance.
The struggling company also plans to raise a further R200m through a rights offer at an issue price of 110c per share.
"I would not support a second rights issue — it’s like throwing good money after bad as I expect a hefty third capital raise upon the Magatron spin-off," Vunani Securities analyst Anthony Clark said.
"There is value in Ellies, but I’d not put any more money in at this stage," Mr Clark said.
The stock was down 19.33% to 96c in midday trade, valuing the company at R434m.