Battery material production group, Novonix Limited got hit by more than 8% negative price movement on Wednesday, 6 February 2019. Just after the company released its notice of extraordinary general meeting presenting the share dilution details on the exercise of notes and options, its stock price smashed as much as 8.163% to last trade at $0.450. It looks like as if investors were not expecting such a move from the company while some negative sentiments were already taking shape contributing to the heavy sell-off.
The company notified that the interests of existing shareholders in the company would be diluted to approximately 70.69% in terms of share capital post notes and options issue, including the issue of 25 million unsecured notes to the St Baker Energy Innovation Fund. This is in comparison to 91.86% interest currently held by the existing shareholders of the company. These aspects haven been indicated under resolutions framed for decisions at the extraordinary general meeting.
Novonix Limited (ASX: NVX) thus seeks to obtain shareholders’ approval for the placement of notes and attaching options to a related party and sophisticated investors. The company notified that its extraordinary general meeting would be held on 8 March 2019 to transact business relating to the issue of notes and options.
Through the placement, Novonix seeks to raise $10.9 million. It includes raising of $10 million via an issue of 25,000,000 unsecured Notes to the St Baker Energy Innovation Fund, a related party of NOVONIX, at an issue price of $0.40 per. Whereas, the remaining $0.9 million is reported to be raised by leading Australian institutional investor via an issue of 2,250,000 notes. This is in reference to the acquisition of additional shares in US-based graphite play PUREgraphite LLC.
Novonix announced that it has increased its stake in PUREgraphite battery joint venture by 25% to 75%. The company conducted due diligence ahead of ownership increase and achieved control of JV. Its production rights have now been increased to 100% above 1,000 tpa.
The significant portion of proceeds from the placement will reportedly be utilized towards Novonix’s increasing ownership and production rights while $3.6 million is to be used in additional capex and opex for higher ownership level and $0.2 million towards the cost of raising.
Moreover, the company explained that the notes are not listed or tradeable and are to be issued with one for one attaching Option, exercisable at $0.80 per share within three years. The settlement will reportedly be held in two tranches with the initial tranche to complete following the General Meeting of Shareholders and the second tranche to end on 1 July 2019.
For Fiscal 2019, the company targets to expand PUREgraphite product trials with the domestic US & global battery makers as well as commission of its first commercial-scale battery anode plant by the second quarter of 2019. Novonix plans to execute the first production and sales of battery anode material by the second half of 2019.
NVX stock has declined by 43.68% over the past 12 months including a negative price movement of 26.32% in the last six months. Its market capitalization stood at $60.34 million as at 6 February 2019.
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