SeaDragon bosses to take up to $300,000 in rights offer

Tuesday 1st September 2015

SeaDragon's senior executives and chairman will subscribe for up to $300,000 of the fish oil refiner's $9 million renounceable rights offer which is needed to fund the building of its Nelson refinery, which has gone over-budget.

Chairman Colin Groves, chief executive Richard Alderton and chief financial officer Stephen Bayley will invest a combined stake of between $250,000 and $300,000 in the Nelson-based company's three for five renounceable rights offer, SeaDragon said in a statement. Each right entitles an investor to one share and one option.

The offer, launched last month, aims to raise at least $2.5 million, with over-subscriptions accepted up to $9 million. Shares are being sold at 0.8 cents apiece, and the options can be exercised any time between Oct. 1, 2015 and Sept. 29, 2018.

The chairman and senior executives, independent of each other, will take up rights to shares granted to them for nil consideration by the company's 42.3 percent shareholder Mersea Holdings. Alderton, the newly appointed chief executive, joined the country's largest refiner and blender of concentrated fish oils and fractions in June.

New capital from the rights issue would be in addition to a $2.5 million convertible loan from cornerstone shareholder BioScience Managers, which isn't participating in the rights issue. The extra capital is needed for the Nelson Omega-3 fish oil refinery, due to be commissioned later this year, which has gone $3.2 million over its $9.2 million budget and is stretching SeaDragon's balance sheet.

In the August offer documents to shareholders, Groves said the funds will also be used to add a fractionation plant to the Nelson facility in order to produce a higher value product, upgrade the existing Omega-2 plant, pay the costs of the offer, and meet the company’s working capital requirements as it transitions to the commercial production of Omega-3 fish oils.

If all entitlements are taken up, SeaDragon's shares on issue would swell to 3 billion from the current 1.88 billion, with 1.13 billion options offered. The company will undertake a 20-to-one share consolidation the day after the shares are allotted, reducing the maximum number of shares outstanding to 150.2 million, and options outstanding cut to 56.3 million. The exercise price for the options is 1.5 cents until the share consolidation, when it rises to 30 cents.

SeaDragon shares last traded at 1 cent and have declined 51 percent since the start of the year. The rights last traded at a tenth of a cent, down from the eight-tenths of a cent they launched at on Aug. 21.

BusinessDesk.co.nz

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