Investorfirst explores funding options
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Kate Kachor is a journalist with InvestorDaily, a Morningstar publication.
Investorfirst (INQ) will engage in a two-pronged approach to improve its financial standing, with the company's board seeking to raise $10.3 million through a rights offer as well as explore funding talks with third parties.
On Friday, the listed financial services firm presented existing shareholders with a one-for-one non-renounceable rights offer.
Under the offer, shareholders will be able to purchase shares at the share price of $0.015, a price the company said represents a 51.6 per cent discount to the volume weighted average price of Investorfirst shares for the 30-day period ended 12 July 2012 of $0.031.
Investorfirst intends to raise around $10.3 million from the issue of around 686.5 million new ordinary shares. The offer is open to registered shareholders on Monday 30 July.
As well as announcing the rights offer, the Investorfirst board said it intends to further explore an unsolicited, highly conditional, non-binding and incomplete proposal from an unrelated third party regarding "an alternative funding initiative".
"[The parties] which have approached Investorfirst have agreed to a tight timetable by which to exchange and negotiate specifics and hence, both parties will seek to complete or accept any proposal following the conclusion of the current rights issue by the end of 12 August," the company said.
"Directors continue to recommend that shareholders treat any related market commentary cautiously."
The proposed share offer is a result of continued poor markets and subsequent poor performance of the listed company, Investorfirst chairman Otto Buttula said in a statement to the Australian Securities Exchange (ASX).
"As previously indicated, Investorfirst continues to record operating losses and this continued during the second half of the 2012 financial year," Buttula said.
"Whilst operating results have exhibited improvement from increased revenue flows in line with statements made in the company's half-year results released to the ASX in February, these have not been sufficient to continue to fully fund the business through to eventual profitability."
The funds raised under the offer will be used to assist key business development and working capital purposes over the course of the next 12 to 24 months, the company said.
Specifically, the company will inject funds into the HUB24 investment platform for software and product development.
The funding will also be used to meet deferred capital purchase expenses for the acquisition of MarketsPlus, which is "central" to meeting its HUB24 objectives, it said.
It will also be used to meet the ASX market participant minimum of $5 million in liquid capital.
"If insufficient funds are raised to pursue the [company strategy], and if other capital raising initiatives are not successful, then Investorfirst would evaluate alternative strategies, including extending the development timeline for the HUB24 platform, establishing [third] party clearing and settlement arrangements for the stockbroking business, and implementing other operational efficiencies across the business," the company said.