Longtable Group To Purchase Maggie Beer, Funded By Rights Issue And Placement: Stock Plummets Over 29%

Longtable Group Limited (ASX:LON), based in South Melbourne, Australia, is engaged in the production and sale of food and beverage products under the brand name Maggie Beer. Besides, it also manufactures dairy food and beverage products including milk, cheese, yogurt, and others under the brand name Paris Creek.

Longtable recently signed a conditional agreement to purchase the remaining 52% stake in Maggie Beer Products Pty Ltd, that it did not previously own since its partial acquisition in July 2016. The total consideration for the buy out is $ 10 million which includes a mix of $ 8.5 million in cash, $ 1 million in LON shares issued at $ 0.20 per share to the vendor, escrowed for 24 months and a convertible note facility of $ 0.5 million (terms applied).

The strategic acquisition of entire MBP shares will expose Longtable with a couple of great opportunities such as drive organic growth in future from existing SKU’s and new product development, better leverage Longtable’s operational expertise and relationships, and the access to a broader market share with strong demand potential.

Moreover, the company is also working on raising additional working capital to support its growth agendas and deliver value to shareholders, bringing the total to $ 15.9 million of capital raising through an institutional placement of $ 2.18 million as per the Company’s current 15% placement capacity, along with a fully underwritten, non-renounceable rights issued on a 1:1.95 basis to existing shareholders to raise the remaining $ 13.71 million. In total, ~ 10.9 million volume of shares will be issued at AUD 0.20 per share, representing 40% discount to the last trading price (A$0.335) on 27 February 2019 and 32% discount to the 30-day VWAP price (A$0.293). The newly issued shares will rank equally w.r.t existing shares. The rights issue will be announced to the market post placement completion, with all board members hinted on accepting the full rights entitlement offer.

Longtable is renowned to have developed a range of premium brands in its basket including Saint David Dairy, Paris Creek Farms, one of Australia’s largest biodynamic organic dairies etc with a clear strategic ambition to grow its current brand portfolio. Going further, the company is also preparing to launch its wellness and nutrition based value-added dairy products like powders and investing in a highly experienced management team.

For the half-year ended December 31^st, 2018(H1 FY2019), the Group achieved revenue of $ 11.11 million, counting in St David Dairy’s sales since August 1^st, 2018, when the company was acquired by Longtable. Besides, the Group incurred a loss after tax of $ 4.73 million, an improvement over the prior corresponding periods’ (H1 FY2018) loss of $ 3.02 million. Over the concerned period, St David Dairy business sales were up 31% to $ 3.60 million and the Paris Creek Farms’ net sales performance for was at $ 8.02 million, down 6% on H1 FY2018 on account of expenditure in the significant transformation programme pulling back sales but does not reflect the business’ great future potential.

Moreover, the Group ended the six-months with a balance sheet stating net assets of $ 66.35 million, including a cash balance of $ 3.98 million as at December 31^st, 2018.

Longtable has a market cap of AUD 41.11 million with ~ 122.72 million outstanding shares.

At the time of trading on Monday, March 4^th, 2019, at 03:10 PM AEST, the LON stock price was trending at AUD 0.240, plummeting by 29.851 %, indicating an intra-day loss of AUD 0.100.

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