SeaDragon to raise up to $9 mln in rights issue to fund plant expansion

Tuesday 18th August 2015

SeaDragon, which manufactures fish oil for health supplements, wants to raise as much as $9 million through a discounted rights issue to help finish building its Nelson refinery, which has gone over-budget.

The Nelson based company announced a three for five renounceable rights offer to its shareholders for one share and one option, it said in a statement. The 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 offer will raise at least $2.5 million, with over-subscriptions accepted up to $9 million.

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.

"The funds will be used to assist with the completion of SeaDragon’s new Omega-3 plant in Nelson, add a fractionation plant to that facility (leading to a higher value, higher quality product), upgrade the existing Omega-2 plant, pay the costs of this offer and meet the company’s working capital requirements as it transitions to the commercial production of Omega-3 fish oils," chairman Colin Groves said in a letter to shareholders.

"On successful completion of the offer, and completion of the Omega-3 plant, SeaDragon will be in a strong position to grow the profitability of the business, aligned with our vision to be recognised by consumers as the global leader in the production of unique and sustainably harvested fish oils for use in supporting healthy lifestyles."

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

The offer opens on Aug. 20 and closes on Sept. 20. Shares not taken up by the closing date will be offered to eligible investors in a shortfall bookbuild. BioScience has agreed to participate in the bookbuild through the convertible note it has already invested into SeaDragon. If the company raises at least $5 million, the notes will convert at the 0.8 cent offer price, and if it raises less than $5 million, the notes will convert at 0.64 of a cent, a 20 percent discount to the issue price.

Beale Capital Consultants will act as lead manager for the book build.

SeaDragon shares last traded at 0.9 of a cent, and have slumped 55 percent this year.

BusinessDesk.co.nz

Comments from our readers

No comments yet