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Seadragon rights issue extended

NZN 19/09/2016 Edwin Mitson

Fish oil refiner Seadragon has raised the minimum $250,000 it sought in a rights issue launched this month and has extended the offer until next month.

Its lender, Heartland Bank, has agreed to temporarily suspend the Nelson-based company's lending covenants for the three months ended September 30.

In a statement, Seadragon said without this, there was a risk that "the company may potentially be in breach of that lending covenant".

The rights offer was launched on September 5 and enabled shareholders to buy a new share in the business for every two shares held at a price of 0.8 cents. At the time, shares in Seadragon traded at 1.2 cents. It has been extended until Octtober 10.

The money will be used to pay the costs of the rights issue, retire bank debt, provide additional working capital as the company seeks to exit the Omega-2 market and enter the Omega-3 market, and provide funding for more processing capacity.

Seadragon wants to raise a maximum of $12.6 million. The prospectus cites the company's ability to secure Omega-3 oil supplies and attracting customers as risks to investors.

Last month shareholders in Seadragon voted overwhelmingly in favour of a funding deal with Comvita which will result in the Manuka honey company taking as much as a 36.5 per cent stake in the fish oil maker.

Shares in Seadragon closed at 0.9 cents and have risen 9.4 per cent since the start of the year.

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