Media Release: Hydrix Announces Fully Underwritten Entitlement Offer And Placement To Raise $3 Million
- Capital raising of $3 million, comprising a $1 million Placement and a $2 million Entitlement Offer
- Entitlement Offer fully underwritten by Henslow Pty Ltd
- Funds raised to pay down debt, increase financial strength and flexibility to navigate COVID-19 disruptions, grow Hydrix Services business and expedite the first sales and implants of AngelMed Guardian® System.
Hydrix Limited (ASX: HYD) (“Hydrix” or “Company”) announces a capital raising of $3.0 million by way of a 1 for 3 pro-rata entitlement offer to raise $2.0 million (Entitlement Offer) and a placement to raise $1.0 million (Placement), at an issue price of 7.5 cents per share, with subscribers to receive one new 12 cents, 2 year option, for every 3 new shares subscribed.
Henslow Pty Ltd is Lead Manager to the Placement and Underwriter to the Entitlement Offer.
Use of funds
Hydrix is undertaking the Entitlement Offer and Placement to raise $3 million. Funds raised will be used to:
- Pay down $0.75 million of the $4.0 million loan provided by Pure Asset Management Pty Ltd (Lender) under a facility agreement dated 15 November 2019 (Facility Agreement). Hydrix and the Lender have entered into a variation to the Facility Agreement, under which the Company will prepay part of the outstanding loan without incurring prepayment fees. As part of the variation, the Company has also negotiated a reduction in the nature and extent of its financial covenants under the Facility Agreement, thereby providing Hydrix with increased operational flexibility;
- Increase the Company’s financial strength and flexibility to navigate COVID-19 disruptions, grow its Services business and invest in high potential client product innovations; and
- Expedite the first implants of the AngelMed Guardian® System – the world’s first FDA-approved implantable heart attack alerting device – within its initial target markets of Singapore and Australia.
Gavin Coote, Executive Chairman of Hydrix said:
“We are delighted to announce this capital raising which supports the strategic growth and debt reduction objectives of the business.
“This Entitlement Offer and Placement enable existing shareholders to participate and to bring some new strategic investors onto the share register.
“In addition, the Company has undertaken cost reduction initiatives in line with the changing revenue outlook since the beginning of COVID-19 and renegotiated the Pure Asset Management facility to reduce debt and simplify covenant terms.
“These actions provide a stronger balance sheet and increase operating flexibility to drive the business for growth in FY21 and beyond,” he said.
Details of the Entitlement Offer
Under the non-renounceable pro-rata entitlement offer of new fully paid ordinary shares in Hydrix (Shares), eligible shareholders are entitled to subscribe for 1 new Share for every 3 Shares held on the record date of 7.00pm (AEST) on Thursday, 9 July 2020 (Record Date), at an issue price of 7.5 cents per Share (Entitlement Offer).
For every 3 new Shares validly subscribed for under the Entitlement Offer, eligible shareholders will also receive 1 free option to acquire a Share, exercisable at 12 cents on or before 31 July 2022 (Entitlement Option).
The Entitlement Offer is only made to eligible shareholders of Hydrix, being shareholders who:
(a) are registered as a holder of Shares as at the Record Date of 7.00pm (AEST) on 9 July 2020; and
(b) have a registered address in Australia or New Zealand.
Under the Entitlement Offer, approximately 26,540,754 Shares and 8,846,918 Entitlement Options (subject to rounding for fractional entitlements), will be issued. The Company will raise approximately $2 million (before costs) under the Entitlement Offer, which is fully underwritten by Henslow Pty Ltd (Underwriter).
Details of the underwriting agreement between Hydrix and the Underwriter (Underwriting Agreement) are set out in the Annexure to this announcement.
Details of the Placement
Hydrix has received binding commitments from sophisticated and professional investors to subscribe for 13.3 million new Shares, at the same issue price under the Entitlement Offer of 7.5 cents per Share (Placement). For every 3 new Shares subscribed for under the Placement, investors will receive 1 free option to acquire a Share, on the same terms as the Entitlement Options issued under the Entitlement Offer (Placement Options).
Completion of the Placement is subject to shareholder approval under ASX Listing Rule 7.1, which the Company intends to seek at a general meeting to be convened shortly. The Company will raise approximately $1 million (before costs) under the Placement.
Details of the Underwriter Offer
Under the terms of the Underwriting Agreement, the Company has agreed to issue the following options, on the same terms as the Entitlement Options (Underwriter Options):
(a) up to 8,846,918 Underwriter Options to sub-underwriters of the Entitlement Offer (who are not related parties of the Company), on the basis of one Underwriter Option for every 3 Shares sub-underwritten; and
(b) 3 million Options to the Underwriter.
Related parties of the Company who participate as sub-underwriters to the Entitlement Offer will not be entitled to receive any Underwriter Options. Accordingly, the number of Underwriter Options required to be issued by the Company may be reduced, depending on the extent of any related party sub-underwriting.
Prospectus and quotation of new securities
The Company has today lodged a prospectus dated 6 July 2020 with ASIC in connection with the Entitlement Offer, Placement and Underwriter Offer (Prospectus).
The Company will apply to ASX for quotation of all new Shares and Options offered under the Prospectus.
Effect of Offers on Hydrix’s capital structure
The effect of the Entitlement Offer, Underwriter Offer and Placement (together the Offers) on the Company’s capital structure is set out below.
|On issue prior to Offers||79,622,263||3,910,127||800,000||1|
|To be issued under Entitlement Offer||26,540,754||8,846,918||0||0|
|To be issued under Underwriter Offer||0||11,846,918||0||0|
|To be issued under Placement Offer||13,333,334||4,444,445||0||0|
An indicative timetable of the Offers is set out below. The Company reserves the right to amend the timetable, in consultation with the Underwriter, and subject to the ASX Listing Rules.
|Company announces Offers under Listing Rule 3.10.3||Monday, 6 July|
|Lodgement of Prospectus with ASIC||Monday, 6 July|
|Lodgement of Prospectus and Appendix 3B with ASX||Monday, 6 July|
|Notice to Optionholders and Shareholders||Monday, 6 July|
|“Ex” Date (date from which Shares commence trading with the entitlement to participate in the Entitlement Offer)||Wednesday, 8 July|
|Record Date (date for determining Shareholder entitlements to participate in the Entitlement Offer)||7.00pm (AEST) on Thursday, 9 July|
|Prospectus and personalised Application Forms sent to Eligible Shareholders and Company announces that dispatch has been completed||Monday, 13 July|
|Opening Date of Offers||Monday, 13 July|
|Last date to extend Closing Date||Monday, 20 July|
|Closing Date||5.00pm (AEST) on Thursday, 23 July|
|Shares are quoted on a deferred settlement basis||Friday, 24 July|
|Announcement of results of Entitlement Offer||Monday, 27 July|
|Issue of New Securities under Entitlement Offer and Underwriter Offer, and lodgement of Appendix 2A applying for quotation of the New Securities||Thursday, 30 July|
|Shareholder meeting to seek approval under Listing Rule 7.1 for Placement Offer. Subject to approval, issue of New Securities under Placement Offer and lodgement of Appendix 2A applying for quotation of the New Securities.||TBC|
About Hydrix Limited
Hydrix Limited (ASX: HYD) is a powerful product innovation company. We leverage our product innovation capability across multiple growth platforms. These platforms include Hydrix Services design and engineering to create products which transform markets; Hydrix Ventures to pick winning investments in high potential innovative products; and Hydrix Medical to create new product revenue streams bringing cardiovascular technologies to market.
For further information please contact:
Rod North, Managing Director,
Bourse Communications Pty Ltd
T: (03) 9510 8309, M: 0408 670 706,
E: [email protected]