Distressed women’s fashion clothing retailer Mosaic Brands, owners of chains including Non-B, Miller, Rockmans and Rivers, has confirmed details of its fundraising plan after a delay this weekend in a decision that ended up being applauded by investors.
Key to the fundraiser will see Melbourne-based private retail giant Spotlight take a $ 10 million stake in Mosaic through a convertible note issue.
Shares fell more than 16% to an 18-month low at 38 cents when details of the capital raise were released and trading resumed at 12:30 p.m. Monday as investors bailed out terrified the recapitalization would be bad .
But the second and third thoughts saw a turnaround in sentiment, and stocks rebounded more than 19% to 54.5 cents.
Mosaic told ASX on Monday that it would seek to raise $ 32 million via a convertible note increase, of which $ 10 million would be issued through a strategic placement with Danfin Pty Ltd, a subsidiary of the Spotlight Group.
The remaining $ 22 million will be offered to shareholders as part of a non-waivable pro-rata rights offer. Shareholders will receive one share for every 4.39 they own.
Mosaic is undertaking capital raise to bolster its working capital levels to overcome current NSW and Victorian-era COVID-19 lockdowns, which have caused significant uncertainty for the business and seriously disrupted exchanges.
“After the offerings are completed, Mosaic Brands expects to be well funded during the current period of trade disruption, based on cautious assumptions about the foreclosure easing measures and the timing of store reopening,” the company said.
Mosaic Brands said it will have pro forma cash flow (as of June 27, 2021) of approximately $ 88.1 million after the offerings are completed.
Spotlight has annual sales of over $ 4 billion across a number of national channels.
It operates the Spotlight fabric and craft chain, outdoor retailers Anaconda and Mountain Designs, and the Harris Scarfe group of department stores.