Capital Reduction Reduces Issued Capital by 32% Post Placement
DEPARTMENT 13 INTERNATIONAL LTD (“Department 13”, “D13” or “the Company”) is pleased to announce that it has received firm commitments from new and existing shareholders to subscribe for 44,350,321 million new ordinary shares at an issue price of $0.125 per share to raise A$5,543,790 million before costs (“the Placement”). The Placement was strongly supported by institutional investors particularly out of the US and Asia and was well oversubscribed, with the initial raise of $4.5m being extended to $5.5m, to partially satisfy extra demand.
The Placement Shares will be issued under the Company’s 15% and extended 10% placement capacity under Australian Stock Exchange Listing Rule 7.1.
Proceeds from the Placement will be used for working capital to buildup inventory of hardware components supporting the software for Mesmer counter drone systems and meet customer demand for Version 1.0.
In addition, Department 13 has agreed to cancel 284 million separate class of performance shares, representing approximately 32% of the current issued capital of the 888 million shares, performance rights and options, which includes the Placement. The Company intends to seek a waiver from ASX from Listing Rule 9.7 to the extent necessary to permit the Company to amend the various restriction agreement between the Company and the holders of Performance Shares such that the Company be permitted to cancel the 284 million Performance Shares issued as part of the acquisition of Department 13 LLC (refer to Prospectus lodged with the ASX on 19 November 2015). The procedure for cancellation will commence following completion of the Placement, shareholder approvals will be sought to cancel the Performance Shares and reduce the issued capital.
The simplified capital structure, reduced shares and share classes (on issue) will benefit existing common shareholders, enable the Company to attract additional institutional investment, as well as prepare for a future potential domestic listing on a US securities exchange.
The cancellation of the Performance Shares will occur in accordance with section 256C of the Corporations Act, which in these circumstances requires:
Subject to the necessary shareholder approvals being obtained, the Performance Shares will then be cancelled for nil consideration.
Commenting on the Placement, Department 13 Chairman and CEO Jonathan Hunter commented:
“The commitment to our company and products can be seen in both the overwhelming support for the current raise and the cancellation of the performance shares. This capital raise will allow us to execute our sales strategy, meet customer demand for Mesmer™ and monetize our expanding patent portfolio. We are also delighted to welcome some high quality institutional investors onto the register from both the US and Asia. Their deep understanding of the counter drone market and Department 13’s intellectual property portfolio as it relates to lucrative commercial markets, makes them valuable partners, who see strong potential in our products, our patented position, market opportunity and future revenue growth.”
The Company is pleased to welcome Tim Davies to the Board of Directors as a Non-Executive Director. Tim is an experienced Chief Executive Officer with a demonstrated history of working in the global finance and investment industry. Tim has worked for high profile groups including Goldman Sachs and Consolidated Press Holdings. Tim was Chief Investment Officer for Caledonia Asia from 2010 to 2012 and prior to that role, he established the China office of Ellerston Capital as Senior Portfolio Manager of China Investments
Highlights from the Corporate Commentary Released on 1st May 2017