Bethunes launchesdeeply discounted rights issue

Bethunes seeks new investors in deeply discounted rights issue

By Suze Metherell

July 27 (BusinessDesk) - Bethunes Investments, formerly known as Mowbray Collectables, is looking to raise up to $2.87 million at a 93 percent discount to the current share price, and wants new investors to help keep its struggling auction houses afloat.

The Wellington-based antiques dealer is looking to raise cash via a 15-for-one renounceable rights offer, priced at 1.5 cents per share, with plans to raise a minimum of $1.5 million, it said in an announcement on the NZX. That's a 93 percent discount to the company's 20 cents per share trading price.

The directors want a new investor because outgoing managing director, company founder and 40 percent shareholder, John Mowbray, won’t take part in the rights issue. Mowbray bought subsidiaries Mowbray Bethunes and Wildlife Philatelic for $950,000, leaving the renamed Bethunes with auction house Webb Galleries as its sole trading entity.

The company used the cash to reduce debt, pay legal, accounting and NZX fees, including a $75,000 cash bond to the stock exchange, and injeced $20,000 into Webb's. While Bethunes has no bank debt, Webb's still has $1.15 million in term debt and working capital overdraft, the company said.

"Bethunes simply has too great a debt burden for a small company, particularly given the volatility that Webb's (its only trading subsidiary) is currently experiencing in the auction market, coupled with the sizeable business interruption from moving premises which has impacted the number of auctions held calendar to date," the company said. "Bethunes needs to address Webb's debt burden to provide time and breathing space if it wishes to maximise value for Webb's in the future or pursue other options such as a sale of Webb's (in which case there is no guarantee the proceeds would be sufficient to discharge the current debt burden in full)."

The company purchased the remaining half of Webb's last year as part of a bid to return to profitability. However, since taking control, Webb's operational results have underperformed forecasts presented during the valuation, and "it is now clear that the purchase price of the 51 percent was too high," the company said in November.

Annual losses widened to $2.95 million in the year ended March 31, from a loss of $112,000 a year earlier, while sales rose 39 percent to $2.3 million.

The company said as at balance date, its net assets were 8.6 cents per share, while net tangible assets per share stood at negative 4.1 cents.

(BusinessDesk)

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