A2 Corporation (NZAX: ATM) (A2C) wishes to provide an update on capital raising activities and also provide confirmation of the launch of Lotte a2 Milk™ in South Korea.
As outlined in the rights issue document dated 22 July (Offer Document), A2C’s $11.3 million nonrenounceable rights issue is proceeding with rights trading through to 20 August and the last day for applications to be received by Link Market Services Limited being 22 August.
The rights issue has been fully underwritten by Mountain Road Investments Limited (“MRI”), a company owned by A2C Chairman Cliff Cook and fellow director Greg Hinton. As advised in the Offer Document, MRI will be subscribing for its full 54.3% entitlement.
MRI has advised A2C that it is finalising arrangements with sub-underwriters but that there remains unsatisfied demand from intending sub-underwriters.
The Offer Document notes that additional capital will be required in the future to fund the Company’s activities. As a result of potential investor interest, the Company is considering bringing forward the proposed new capital raising. The terms of any new capital raising will not be finalised with any of the interested parties prior to the close of the rights issue but A2C anticipates that the issue price for any additional capital will be at or above the 10¢ pricing under the rights issue.
The Board of A2C will not issue any additional capital unless it is satisfied that it is in the best interests of A2C to do so. While the funds raised by the rights issue (together with a modest bank overdraft) were expected to fund the Company’s operations over the next 12 months the Board is mindful that additional capital in the short term may provide benefits. These benefits include certainty, eliminating the interest costs on bank debt and the involvement of larger sophisticated investors as shareholders. The Board currently believes that these benefits will likely justify the anticipated additional capital.
The Board will provide further updates to shareholders once the terms of any subsequent share placements are known.
South Korean Launch
As has been previously announced, A2C signed an exclusive licence agreement with Lotte Milk in South Korea in October 2007 for the production and sale of Lotte a2 Milk™. The first product was launched on shelf in South Korea on 1 August through Lotte Department Stores with the product to be distributed to other retail chains over the next two months.
For more information please contact:
Anthony Lawler, CEO, A2 Corporation, Ph +64 9 523 4795
Julien Leys, JML Communications, Mobile +64 21 655 598