SeaDragon cornerstone shareholders keep company afloat via $6M convertible loan note

Thursday 14th June 2018

SeaDragon has negotiated $6 million of new funding from its cornerstone shareholders and a new deal with Comvita that will allow it to meet immediate and medium-term cash flow requirements.

The fish oil manufacturer said that BioScience Managers, an Australian investment firm, and Pescado Holdings, which is associated with Christchurch's rich-lister Stewart family agreed to advance up to $3 million each 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.

Earlier this month it forecast a net loss after tax of between $3.6 million and $4.55 million in the year ending March 31, 2019, and said its ability to deliver on its forecast depends on securing long-term funding for the company.

“The continued support of our cornerstone shareholders is very valuable to SeaDragon. These facilities will allow SeaDragon to continue to target sales growth in FY19," said chair Colin Groves.

The new CLN will mature on March 31, 2020. Any drawdown is limited to an aggregate amount of $1.75 million until shareholder approval of the terms and conditions and will be repayable in full if shareholder approval is not received on or before Aug. 15, it said.

SeaDragon already has a convertible loan note with Comvita that it received in 2016. Both that and the new CLN will convert to ordinary shares in SeaDragon at a conversion price of $0.0033 per share. The strike price of Comvita’s existing $3 million Additional Option is to be amended to be the same $0.0033 per share and the exercise period extended to 31 March 2020, it said.

SeaDragon shares last traded at $0.004 or four-tenths of a cent.

SeaDragon will use the proceeds from the initial drawdown under the new CLN to repay the short-term $1 million aggregate amount of bridge facilities provided by BioScience and Pescado in May 2018, with the repayment date extended to 6 July 2018, it said.

It also announced that - subject to shareholders approving the new CLN - it has agreed in principle that all current shareholders will be provided with an opportunity to participate in a follow-on one-for-one renounceable pro-rata rights offer at a price equal to the conversion price noted above for the New CLN

(BusinessDesk)

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