AFT Pharmaceuticals cofounder and managing director Dr Hartley Atkinson. Photo / File
AFT Pharmaceuticals cofounder and managing director Dr Hartley Atkinson. Photo / File
NZX-listed AFT Pharmaceuticals is raising $10 million through a discounted share placement.
At the same time, long-time shareholder Capital Royal Group is selling all of its 16 per cent stake, worth around $58m, while the founders' Atkinson Family Trust is also selling $3.5m worth of shares, or 1.3 per centof its current holding.
The placement and share sales are underwritten by Bell Potter Securities and Forsyth Barr Group at a floor price of $3.65, a 22 per cent discount to the last price of $4.70 yesterday. A trading halt is in place until the placement completes.
The transactions will increase the free float from 11 per cent to approximately 31 per cent.
Both shareholders opted to sell due to "significant investor interest". The transactions will "substantially increase free float from approximately 11 per cent to approximately 31 per cent" and are expected to provide a material increase to trading liquidity, it said.
AFT was founded by pharmacologist Dr Hartley Atkinson and his wife Marree Atkinson, a registered nurse at Waikato Hospital, in 1997, with the pair working out of their garage with $50,000 in bootstrap money.
"All of the experts informed us we were start raving mad and would be squashed by the big players within five minutes," Atkinson told the Herald this morning.
The transaction announced this morning marks the first time the Atkinsons have cashed in since the initial public offering in 2015 when the stock was sold at $2.80 apiece.
"We still be the largest investors [the Hartley's trust will own 69 per cent post-sale] so our interests are still well and truly aligned with shareholders."
Hartley played down CRG cash-out, saying it had invested through a closed-in fund that had reached the end of its term. CRG, which has been a shareholder since 2014, was returning capital to its investors.
CRG was one of AFT's lenders and was owed about $41.8m as of March 31, 2019. AFT repaid the CRG loan on that date and refinanced it with a three-year BNZ loan.
AFT said it expects the placement shares to be allotted and trading to begin on the NZX and the ASX on Monday. The share purchase plan will open on June 15 and close on June 26.
The funds will be used to retire one of its working capital facilities, which is expected to reduce annual interest costs by about $850,000 and reduce pro-forma net debt to $25.1m from $37.1m.
AFT hit the top end of its earnings guidance for FY2020, which Atkinson credited, in part, to strong demand for his companies pharmaceuticals and supplements as Covid-19 hit in the final quarter.
AFT
The company is forecasting an operating profit in the range of $14m to $18m in the 2021 financial year, which represents growth of up to 58 per cent before any upfront licensing fees.
Once the debt levels are down to "satisfactory levels", AFT's board will look at paying a dividend, it said.
The immediate focus for surplus cash is to target net debt of $23m-to-$28m. AFT will "assess potential for a dividend policy in FY2022 once debt is retired to satisfactory level," the company said in an investor presentation.
