Woodbois Announces Discounted £2.65m Fundraise to Stabilize Business
Why we think this is bad
The significantly discounted equity raise of up to £2.65 million, representing a 16.67% discount to the previous closing share price, is a very negative sign indicating low investor appetite for the company's shares. The raise amount is relatively small compared to the company's market capitalization, further suggesting the dire financial situation Woodbois finds itself in. The potential dilution for existing shareholders is substantial, at 127% of the existing issued voting ordinary share capital. While the raise will provide much-needed working capital to stabilize the business, the company's financial position appears to be in a precarious state, with creditors not being managed and the business in near paralysis. There are also concerns about legacy issues and the high risk of insolvency if the raise is unsuccessful. Overall, the news paints a bleak picture for Woodbois, and existing shareholders are likely to suffer significant value erosion.
Key Points
- Proposed fundraising of up to £2.65 million via a subscription for new ordinary shares at 0.05p per share
- Represents a 16.67% discount to the previous closing price of 0.05999999865889549p
- Raise amount is relatively small compared to the company's £3.11 million market capitalization
- New shares represent 127% of the existing issued voting ordinary share capital
- Purpose is for general working capital and to improve financial position with creditors
- Company acknowledges it is likely to become insolvent without the fundraise
Summary
Woodbois Limited, the Africa-focused forestry, timber trading and afforestation company, has announced a proposed fundraising of up to £2.65 million by way of a subscription for new ordinary shares at a 16.67% discount to the previous closing price. The proceeds will be used for general working capital and to improve the company's financial position with its creditors. The company's financial liquidity is extremely tight, and without the fundraise, it is likely to become insolvent. Broker targets are not available.