Seeking to provide a funding alternative for its hydrogen development plans in 2024/25, Provaris Energy Ltd (ASX:PV1, OTC:GBBLF) has secured a two-year A$3 million convertible note facility with Macquarie Bank Ltd, while also launching a A$2 million share purchase plan (SPP) offer to eligible shareholders.
Convertible note facility
The convertible note facility with Macquarie provides Provaris with up to A$3 million of standby capital over the next two years.
This provides invaluable flexibility for the company to pursue its capital-raising endeavours in tandem with the progression of its hydrogen development projects and the commercialisation of its intellectual property (IP) and hydrogen supply chain solutions.
A first tranche of A$500,000 convertible bond has been executed as part of the facility agreements, with a two-year term to maturity. The issuance of further tranches remains at the discretion of Provaris and Macquarie, ensuring strategic alignment with the company's evolving financial requirements.
Each convertible bond will convert into ordinary shares of the company. The exact number of shares will be based on the share price at the time of conversion.
"Increases flexibility"
Provaris managing director and CEO Martin Carolan said: “This standby facility with Macquarie increases the flexibility of future funding alternatives available to our various projects and development activities which are aligned with the achievement of further commercial and technical milestones ahead for 2024.
“The facility also complements today’s announcement of a share purchase plan offer to eligible shareholders and strengthens the company’s financial position and aligns with our development program funding requirements over time.
“Activities which include collaboration for hydrogen production, final class approvals for shipping, joint development of an import terminal, activities related to MOUs with utilities in Germany, and an exciting venture to produce small-scale tanks for sale which could position the Company to have a commercial product in 2024.”
SPP launched
In addition to the facility, Provaris has launched an SPP to eligible shareholders, to raise up to A$2 million (before costs).
Under the SPP, shareholders can apply for up to $30,000 in value of new Provaris shares at A$0.04 per share, without incurring brokerage or transaction costs.
The SPP issue price represents a 16% discount to the closing price of the company’s shares on April 30, 2024, and a 12% discount to the volume weighted average price for the five trading days ending April 30, 2024.
Funds raised under the SPP will be applied to the ongoing development of Provaris’ proprietary IP and solutions for the storage and marine transportation of hydrogen in compressed form, including Provaris’ prototype tank and Marine Classification Approvals for the H2Neo hydrogen carrier and H2Leo storage barge.
They will also support development of small-scale storage tank solutions for industrial storage application along with the progression of hydrogen production and export project development opportunities, in collaboration with Provaris’ collaboration partners.
“I would like to express my gratitude to the shareholders of Provaris who continue to support the company’s strategy and implementation of our development of a hydrogen supply chain for Europe, which in recent months has demonstrated the increasing focus and recognition from industry through collaborations, partnerships and MOUs announced,” said Carolan.
“Our unique approach for a hydrogen supply chain using the simplicity and energy efficiency of compression can deliver first hydrogen gas to Europe at a competitive cost using Provaris’ H2Neo carriers, and we believe the combination of first-mover status and unique IP under development is yet to be recognized in the company’s current valuation.
“The company continues to assess alternative funding sources to minimise dilution on shareholders whilst providing the necessary funding to support our development program.
"We believe the SPP offer to shareholders is a complementary fundraising to today’s announcement of a A$3 million convertible note facility with Macquarie Bank Limited, providing standby capital and invaluable flexibility over the next two years.”