Friday 13th April 2018
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ASX-listed incubator Powerhouse Ventures has dumped plans to raise A$5.8 million in a one-for-one rights issue, accepting less than a third as much from two major shareholders offering a lifeline.
The Christchurch-based company, which typically invests in firms formed to commercialise research out of New Zealand and Australian universities, accepted an immediate A$400,000 injection from the two investors, selling convertible notes paying 12 percent annual interest at 20 Australian cents apiece, it said in a statement. The shareholders have offered a further A$950,000 on the same terms, and other investors have indicated a willingness to invest another A$500,000, taking the total new capital to A$1.85 million.
Powerhouse this week offered to sell about 29 million new shares to existing holders at 20 Australian cents apiece in order to raise up to A$5.8 million for working capital and investments, having burned through $1.4 million in the three months ended March 31, leaving it with $192,183.
Its portfolio of investments was valued at $17.5 million, down from the $21.1 million value as at June 30, and this week said it was working with an Australian capital networks broker to gauge interest the partial or full sale of its 20 percent stake in Invert Robotics, valued at $4.3 million as at Dec. 31.
However, "discussions with major institutional shareholders as a necessary part of that Offer have led to an immediate funding offer from two of these shareholders of A$400,000 in convertible notes prices at 20 (Australian) cents per share, paying a coupon of 12 percent per annum and having an expiry date of March 31, 2019," Powerhouse said in a release to the ASX.
"Acceptance of these offers has enabled the Company to avoid payment of significant entitlement offer underwriting fees," it said. Funding will be made available immediately.
Accepting the shareholders' further offer of A$950,000 requires a shareholder vote under ASX listing rules, and potentially the New Zealand takeovers code as the company's 15 percent placement cap must be expanded if the issue of convertible notes means a shareholder may be able to exceed the 20 percent takeover threshold upon conversion.
Directors have indicated a willingness to accept the additional funding, subject to the required shareholder approvals.
According to the release, other institutional shareholders have indicated they will make additional funding of some A$500,000 available, likely on the same terms. Directors are yet to decide whether they will accept it.
The resolution to expand the 15 percent placement cap will be put to shareholders in the near future, it said.
The stock, which is on a trading halt, last traded at 22 Australian cents.
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