In a surprise move on Friday last week, Wide Open Agriculture (WOA) retrospectively improved the terms of its recent $6.1 million fundraiser by offering a one-for-one free option after big investors had already pledged the money.
No doubt its institutional investors were somewhat peeved to find the share price had slumped to 13 cents after they had agreed to buy at 20c. But most companies would have said: "Thanks for the money, folks, sorry about the share price".
WOA prides itself on being an ethical, regenerative agricultural company, and in part, this decision reflects that.
No doubt, however, it was also motivated by the need to rescue the current share purchase plan offer to retail shareholders. Not even mums and dads will pay 20c when you can buy WOA shares in the market for less.
The free option offer has also been added to the retail offer, and the closing date extended until December 13. The free options give the opportunity to buy WOA shares at 20c at any time over the next two years.
Given that WOA hit 32c in April at the first suggestion that its Buntine lupin protein was on the verge of commercial production, and a commercial production deal has since been confirmed with Prolupin in Germany, 20c doesn't look like such a bad price.
Admittedly, WOA will have to spend up to $5 million to modify the machinery in Germany on top of its $4.5 million purchase of Prolupin. The hope is that this will result in the production of up to 1000 tonnes a year of Buntine for human consumption within one to two years.
The Punter is now more likely to take up the SPP offer but will wait until closer to the closing date.
He has been tempted to buy more WOA in the market, but the record date for the SPP was October 17, so his additional shares would not qualify for the options.
- 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.
