Pearl Global Limited (ASX: PG1) is an Australia based tyre processing company that is currently focused on processing end of life rubber including waste tyres. It uses a unique extreme heating process called thermal desorption technology to cleanly separate waste into its component parts. The company has Australia’s only environmental approval for the thermal treatment of rubber and is on its path to open its first commercial-scale production plant in Stapylton, Queensland. This technology is well capable of processing other waste products like treated timber, contaminated soils and plastic bottles which are available in huge quantities and makes the company uniquely positioned to offer processing solutions for diverse products which are both environmentally sound and commercially viable.
On 13th March 2019, the company has announced that it has entered into a conditional placement agreement with ROC Asset Management Pty Ltd (ROC). Under the agreement ROC or its nominated entity (investor) has agreed to subscribe for $5 million of fully paid ordinary shares for the issue price of $0.127 per share in Pearl Global with one free attaching unlisted option to acquire one Share in Pearl Global on exercise of each option for every two Shares subscribed for by the Investor. The attaching options will be exercisable at $0.24 each, expiring 12 months from the date of Completion.
ROC is an alternative investment firm having more than $6.4 billion in asset under management (AUM). It has completed more than 150 investment transactions in over 20 years of its investing experience in growth equity.
The issue of Shares and Options to the Investor under the placement is conditional to receipt of required shareholder approvals under the ASX Listing Rules and the Corporations Act 2001 (Cth), among many other things. Pearl Global has also proposed to conduct a meeting in which approval of the issue of securities under the placement would be taken from its shareholders and to pass other associated resolutions.
As a consideration, Pearl Global has agreed with the investor that if it chooses to issue further Shares for raising additional capital within 24 months after completion (New Issue), other than by way of a pro rata issue, the investor would be given the right to participate in the new issue on terms no less favourable than those offered to any third-party investor.
Below are some of the Key terms that must be satisfied (Till April 2019) by Pearl Global under the agreement to demonstrate that it is equipped and prepared for significant growth and for the investor to participate in the placement:
- The company would be entering into 24-month voluntary escrow arrangements with associated entities of Gary Foster (Chairman), Andrew Drennan (Managing Director) and Bert Huys (Chief Technical Officer) for 90% of their holdings in Pearl.
- The company must complete its acquisition of Australian Tyre Processors Pty Ltd and thereafter securing intellectual property
- The entry into of the Pearl Call Option will be subject to receipt of required shareholder approvals under the ASX Listing Rules and the Corporations Act, which will be sought at the meeting.
- Alignment of IP interests between Pearl and Keshi
On 4th February 2019, the company had released its operational update for the quarter ended December 2018.
The stock is trading 6.25% lower at A$0.15 as of 13th March 2019 (AEST: 2:30 PM) compared to the previous closing of A$0.16. In the last one month, the stock has given a rally of more than 23% while YTD return stands at negative 5.88%.
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