Tuesday 21st August 2018
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SeaDragon is calling on its shareholders to pay a 10 percent premium to participate in a $14.9 million pro-rata renounceable offer to help struggling fish oil manufacturer remain afloat.
The company forecast a net loss of between $3.6 million and $4.6 million in the year ending March 31, 2019, and said its ability to deliver on forecasts depends on securing long-term funding for the company.
“As previously announced to shareholders in May 2018, the company has been considering capital raising options and has decided to initiate a rights offer to shareholders to provide additional capital to facilitate growth and meet working capital, operational expenditure needs and capital expenditure items," said SeaDragon chairman Colin Groves.
The offer will be a 1-for-1 with an issue price of 3.3 cents per share, which is the same price as the conversion price under the convertible loan note agreements with cornerstone investors Pescado Holdings Ltd and One Funds Management Ltd. The shares last traded at 0.3 cents, valuing the company at $13.5 million, and have halved so far this year.
SeaDragon had already hammered out a deal under which Australian investment firm BioScience Managers and Pescado Holdings, which is associated with Christchurch's rich-lister Stewart family, each agreed to advance up to $3 million via a new convertible loan note facility. An existing convertible loan note facility and existing option to purchase $3 million of ordinary shares in SeaDragon with Comvita will be amended.
The rights offer document will be released to the market on Aug. 28 and shareholders will be able to subscribe for one new share for every share they hold as of 5pm on the Aug. 29 record date. Eligible shareholders who subscribe for their full entitlement of new shares under the offer may also apply for additional shares through an oversubscription facility.
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