Melodiol Global Health Ltd (ASX:ME1) is set to raise around $1.4 million in a cash placement and agreements to convert debt to equity.
The company has received firm commitments from new and existing institutional, professional and sophisticated investors to raise cash and convert current liabilities to equity through the issue of approximately 167,445,189 fully paid ordinary shares at $0.00821 per share.
Melodial will also satisfy its obligations under the third amortisation payment to SBC Global under the Convertible Note Facility via the issuance of 33.75 million shares. Once complete, the facility will be two-thirds repaid.
Use of funds
The company will use the money raised for marketing and sales initiatives, along with the completion of pending M&A.
Importantly, the placement adds to its strong unaudited net sales for the combined Melodiol group of $4.74 million during Q2 FY2023. This is a 105% gain on Q1 FY2023 and a 202% increase on the previous corresponding period.
Melodial could expect more cash in the bank following its recent Letter of Intent (LOI) to sell Sierra Sage Herbs and Halucenex for a total transaction price of approximately up to A$30 million, including A$3 million in upfront cash.
“We are very pleased to have received support for this new funding. I would like to thank existing shareholders for their support, as well as welcome new investors to the register,” Melodial CEO William Lay said.
“The new funding will allow us to continue delivering strong revenue growth and diligently pursue group profitability. Melodiol remains very focused on its cost base, evident from the recent LOI to sell two early-stage divisions for up to A$30 million, while seeking additional revenue-generating opportunities.”
About the placement
Should shareholders approve, placement participants will also receive two free attaching listed options, exercisable at $0.25 on or before November 2, 2024, for every one placement share subscribed for and issued.
The issue price of new shares represents a 17.9% discount to the last closing price of $0.01 on August 3, 2023, and a 24.9% discount to the 15-day VWAP being $0.011.