- Cirralto has received applications for raising $2.712 million (before costs) under a placement to investors at an issue price of A$0.01 per share.
- The oversubscribed placement demonstrates the investors’ understanding of Cirralto, Spenda’s payments tech and its position in the market.
- Cirralto is processing ~$1.7 million through its Spenda platform and reported total customer and addressable market growth of 10.4 per cent and 9.4 per cent in July.
- The Company plans on utilising the funds raised from the capital raising to support growth, development of additional payment products, debt reduction, marketing, the cost associated with the completion of the Appstablishment acquisition and general working capital requirements.
Gearing up the momentum to take its offerings up a notch, Cirralto Limited (ASX: CRO) appears to be moving on the right track. In a significant update, the Company announced the receipt of applications to raise $2.712 million (before costs) under a placement to institutional and sophisticated investors at an issue price of A$0.01 per share.
The successful capital raise, via offering robust liquidity to the Company, would bolster its journey in the digital payments and software solutions space as Cirralto focuses on making processing B2B payments easier for its customers. Notably, Cirralto in association with its merger partner Appstablishment has launched the Spenda Digital Payment suit, catered towards offering a single-platform solution, enabling all businesses to receive and make payments on time.
Cirralto has already initiated the payments processing of worth more than $1.7 million currently processed by customers via the Spenda platform, providing an average merchant fee of 1.45 per cent of the total value of transactions processed. The Company in July 2020 reported total customer growth of 10.4 per cent and addressable market growth of 9.4 per cent, respectively.
Commenting on the successful capital raising, CRO Managing Director Adrian Floate expressed pleasure about the strong demand for the capital raise, it also indicated the investors’ understanding of the Company’s payments tech and its position in the market. He noted that the funds raised from capital raising along with the operational savings that the Company has created by virtualising the organisation would be used for delivering a debt-free balance sheet while also providing working capital for growth. Mr Floate also stated that the Company is “focussed on growing our merchant base and capturing market share”.
Lens Through the Placement Details
Cirralto had initially sought for raising $2 million under the placement. Though due to the receipt of strong demand from a significant number of new institutional and sophisticated investors and as such, the Company has elected to increase the placement size, accommodating a portion of the excess demand to raise an additional $712,000.
The Company intends to issue 271,200,000 fully paid ordinary Cirralto shares at $0.01 price per share for total proceeds of $2,712,000. The transaction also includes participation from the Board and management of the Company, which proposes to buy 8,200,000 shares of the total for $82,000. Notably, the participation of the Board and management is subject to shareholder approval, which will be sought at the Company’s next general meeting, planned for the 27 November 2020. Apart from the Board participation, no shareholder approval is required as the issuance of the remaining shares is within the pre-approved placement capacity of the Company pursuant to the approval received at its general meeting held on 24 July 2020 (Resolution 10). Placement for pre-approved 263,000,000 fully paid ordinary shares is expected to complete on 17 August 2020.
The placement issue price of $0.01 per share represents a 23 per cent discount to the previous closing price ($0.013) on 07 August 2020 and a 14.7 per cent discount to the 15-day Volume Weighted Average Price (VWAP) of $0.0117.
New shares that will be issued under the placement will rank equally on the issue with existing ordinary shares.
CPS Capital and Canary Capital, which acted as joint lead managers to the issue, will be receiving a fee of 6 per cent of the amount raised along with 100 million options exercisable at $0.025 expiring on 28 July 2023.
Significance in Cirralto’s Advancing Journey
The funds raised will be geared towards supporting growth, debt reduction, additional payments, product development, marketing, costs related to the completion of the Appstablishment acquisition along with general working capital requirements.
Apart from the strengthening the Company’s balance sheet, some of the new funds will be used to retire ~1 million in debt and debt-related instruments, including the Obsidian Global Partners LLP Funding Facility
Besides the placement, the Company is also finalising an option entitlement offer to shareholders and will announce the details of the offer shortly.
Road Ahead for the Company
Kalkine Image (Data Source: CRO ASX Update)
CRO stock closed at $0.017 per share on 18 August 2020.
[Note: All currency is in AUD unless stated otherwise]