Woe are the shareholders in Wide Open Agriculture (ASX code WOA). The shares are back trading after a long suspension but the price has more than halved.
The good news is the final conditions for its takeover of German lupin protein manufacturer Prolupin have been met. It has been promised $6.2 million in a private placement at 20c a share, mainly from its largest shareholder, Fanja Pon, and its directors, and it is paying only $4.2m to buy Prolupin.
The deal will give WOA almost immediate access to manufacturing, of 500 to 1000 tonnes a year, and open up commercial opportunities in Europe. WOA is already quoted on the German stock market.
However, it wants another $1.5m to modify Prolupin's machinery and cover other expenses. It is hoping ordinary shareholders will provide the cash by buying new shares, also at 20c each.
But the shares are trading around 14c-15c. The Punter won't put his hand in his pocket unless the price climbs back above 20c before the offer closes at the end of November.
The current stock market mood is terrible, but the WOA price could still recover. The company had nearly $6m cash at the end of June, and debts of only $600,000. Its regenerative agriculture and Dirty Clean Food business had revenue of more than $11m last year.
The blue sky is that WOA has a non-binding agreement with Saputo Dairy Australia that could potentially lead to production of up to 50,000 tpa of Wide Open's "Buntine" protein.
If all goes well, someone is going to have to start growing a lot of lupin.
They are unlikely to be fertilising it with sulphate of potash from WA any time soon. Trigg Minerals (TMG) have conceded the industry has critical processing problems. TMG's testing of new techniques is due to be completed before the end of the year. Fingers crossed.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
