Wednesday 28 September 2016 03:36 PM
Seadragon's talks with new cornerstone investor collapse
By Edwin Mitson
Sept. 28 (BusinessDesk) - Seadragon, the fish-oil refiner, has warned investors that preliminary talks with a potential new cornerstone investor have failed.
The Nelson-based company is in the middle of a rights issue where current shareholders can take up one new share for every two currently held at 0.8 cents apiece. In an update to the NZX, Seadragon said it had raised a total of $1.5 million so far, with the issue to close on Oct. 10.
The company also highlighted an off-market trade in the rights to take up the new shares, which saw the rights to 367,632,401 new shares being sold at a price of 0.05 cents.
Seadragon told investors that it continues to discuss investment opportunities with other potential investors. The rights issue seeks to raise up to $12.5 million.
Seadragon already has a cornerstone investor in Comvita. In August, shareholders in Seadragon voted overwhelmingly in favour of a funding deal with the manuka honey supplier which will result in Comvita taking as much as a 36.5 percent stake in the fish oil maker.
In September, Heartland Bank agreed to temporarily suspend Seadragon's lending covenants for the three months ended Sept. 30 to enable the rights issue to be extended.
The rights issue aims to put the company on a more secure financial footing. Auditors in June warned there were uncertainties that cast doubt on its ability to continue as a going concern if it didn't receive continued backing from its investors and lender.
Shares in Seadragon were unchanged at 0.9 cents and have fallen 27.6 percent since the start of the year. Shares in Comvita are down 0.87 percent to $11.35. They've risen 36.5 percent since the start of the year.