Collaborate Corporation Limited (ASX: CL8) is mainly involved in car and caravan rental business. Today (11 January 2019) the company announced that it has executed a controlled placement deed with Acuity Capital to raise up-to to $3mn of equity over a period of 30-months. The facility provided by Acuity Capital will enable Collaborate to have full control over the process of the placement and it will also provide access to funding for Collaborate”’s business growth.
As per the terms of the deed, the company will have full control in all aspects while initiating the placement process, with sole discretion whether it wants to utilize the placement deed, the quantity in which shares will be issued and the minimum issue price of the shares including the timing of any placement tranche.
However, the company is not obliged to use the deed, and it may terminate it at any time with simply notifying prior five business days, without any penalty. The company has no restrictions either to raise capital through other methods.
However, with its discretion Collaborate can set a floor price if it chooses to use the controlled placement deed. The issue price finally will be calculated as the greater of that floor price set by Collaborate or at a 10% discount to a Volume Weighted Average Price of the company’s shares over a time period which the company can choose at its discretion.
A controlled placement deed is a valuable tool as it can be used as an additional source of funding. Placements made under the agreement will primarily be used to provide funding for customer acquisition, which will help the company to get support while launching any new initiatives and for raising working capital as well.
The company has agreed to place 20 million fully paid ordinary shares at nil consideration to Acuity Capital as collateral against the deed, however it may terminate the deed at any time, and buy back the collateral shares for nil consideration subject to the approval of shareholders.
Both the companies have come to terms to a one-time issue of 2,500,000 Shares at a deemed issue price of $0.015 per share to enter the agreement, as a part of the consideration. There are no other fees required to be paid to Acuity Capital.
The CEO and Executive Director, of the company Mr. Chris Noone, said that the company would enjoy the benefit of accessing funds as per requirement through the deed, however without any immediate shareholder dilution at the same time. The business can access funds for the growth coupled with supporting the launch of the previously announced car subscription product.
Now, let us quickly look at the performance of Collaborate’s stock and the return it has posted over the last few months. The stock last traded at $0.012 with a market capitalization of $8.26 million. The company posted a negative return of 32.08%, 20.0% and 7.69% over the last six months, three months and one-month period respectively. It has a 52-week high price of $0.034, with an average traded volume of nearly 442,792.
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