Recce Pharmaceuticals is set to raise approximately $11 million through a capital raise, involving a placement of about $18.2 million in new shares and a pro-rata non-renounceable entitlement offer. The funds will be allocated to clinical trials, expanding the pre-clinical portfolio, manufacturing expansion to the U.S., and general working capital. The placement offers new shares at $0.44 each, representing a discount to recent closing prices. The entitlement offer allows existing shareholders to acquire one new share for every 26 existing shares at the same offer price as the placement.
Recce Pharmaceuticals Ltd (ASX: RCE, FSE: R9Q) (the Company or Recce), the Company developing a new class of synthetic anti-infectives, announced today a capital raise of up to approximately $11 million before costs consisting of:
- Placement of approximately $18.2 million new fully paid ordinary shares in the Company (New Shares) at $0.44 per new share (Offer Price), with commitments received totaling $8 million from institutional, sophisticated, and professional investors (Placement).
- A pro-rata non-renounceable entitlement offer of one new share for every 26 existing fully paid ordinary shares in the Company (Shares) held by eligible shareholders at the same offer price as the placement to raise to a further $3 million (Entitlement Offer).
“We are thrilled to receive such strong financial interest, particularly among global investment funds,” said James Graham, Chief Executive Officer of Recce Pharmaceuticals. “It was important to the Recce team that our shareholders be offered the same opportunity, and we are pleased to make this available to them. As the world’s most clinically advanced new class of anti-infectives at this time, it is clear that commercial potential is recognized. With a strengthened balance sheet and multiple clinical trials, we are well positioned for the time ahead.”
Use of Funds
The funds raised will be used for the following activities:
- $6M – Clinical trials (significant, unmet medical needs):
- Phase I/II (IV) – Urinary tract infections/urosepsis
- Phase II (topical) – Burn wound infections
- Phase II (topical) – Diabetic Foot infections
- $2M – Build out advanced pre-clinical portfolio (in vitro, in vivo, and ex vivo studies)
- $1M – Manufacturing boost, including geographical expansion to the U.S.
- $2M – General working capital (operational costs delivering above)
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Details of the Placement
The Company has received binding commitments from institutional, sophisticated, and professional investors to subscribe for 18,181,819 new shares in the Company at the offer price to raise approximately $8 million before costs.
The issue price of $0.44 per new share under the capital raising represents:
- a 32.3% discount to the last closing price of $0.650 on September 7, 2023
- a 35.0% discount to the 5-day Volume Weighted Average Price (VWAP) of $0.677
- a 36.6% discount to the 15-day VWAP of $0.694
All new shares issued under the capital raising will rank equally with existing shares of the Company from their issue date. The placement is not subject to shareholder approval and will fall within the Company’s placement capacity under ASX Listing Rule 7.1.
The placement is anticipated to settle on Friday, September 15, 2023, which is after the record date for the entitlement offer (Thursday, September 14, 2023), such that participants in the placement will not be entitled to participate in the entitlement offer in respect of any new shares issued to them under the placement.
The placement is not underwritten, and Canaccord Genuity (Australia) Limited acted as Lead Manager to the placement, and Ord Minnett Limited acted as Co-manager to the placement.
Details of the Entitlement Offer to Shareholders
Participation in the entitlement offer will be open to Recce shareholders who are registered holders of shares at 7:00 p.m. AEST on the record date, Thursday, September 14, 2023, and who have a registered address in Australia or New Zealand (Eligible Shareholders).
Each of the Directors of the Company intends to subscribe for their respective entitlement partially or in full under the entitlement offer.
The entitlement offer will allow eligible shareholders to receive one new share for every 26 existing shares held by eligible shareholders on the record date at an issue price of $0.44 per new share.
The entitlement offer will be open to eligible shareholders from Friday, September 15, 2023, to 5:00 p.m. AEST on Wednesday, September 27, 2023, and will not be underwritten.
Any new shares not applied for under the entitlement offer and any entitlements that would have been offered to ineligible shareholders if they had been entitled to participate in the offer will form part of the shortfall from the entitlement offer. Eligible shareholders who take up their full entitlement under the entitlement offer will have the opportunity to apply for additional new shares above their entitlement through a shortfall facility, subject to the Corporations Act 2001 and ASX listing rules.
There is no guarantee that applicants under this shortfall facility will receive all or any of the additional new shares that they apply for under the shortfall facility.
Any entitlements not taken up according to the entitlement offer and not otherwise allocated to eligible shareholders under the shortfall facility may be placed by the Company at its discretion up to three months after the closing date of the entitlement offer, subject to the Corporations Act and ASX listing rules.
The entitlement offer is non-renounceable, and entitlements will not be tradeable on ASX or otherwise transferable. Eligible shareholders who do not take up their entitlements will not receive any value for those entitlements that they do not take up.
Further information in relation to the entitlement offer will be sent to eligible shareholders in the offer booklet and accompanying personalized entitlement and acceptance form, which are expected to be dispatched on Friday, September 15, 2023.
Source: Bio Space