(BFM Bourse) – The group is appealing to the market to ensure its survival and extend its financial horizon to more than a year. The company will also stop the direct exploitation of its traditional products.
In great financial difficulty, with an activity undermined by logistical concerns and the crisis in household purchasing power, Mastrad took radical decisions.
The specialist in kitchen utensils, such as cooking probes, molds, spatulas or other spoons had warned in November that he would have to carry out a capital increase in order to replenish his cash in the short term.
The group didn’t take too long. Mastrad announced on Wednesday the launch of this call for tenders with a target amount of 4.33 million euros, with maintenance of the preferential subscription right (DPS). The parity is 302 new shares for 100 existing shares. This means that an existing shareholder with 200 shares can use his DPS to subscribe in priority to the capital increase up to 604 new shares.
Rare fact, the new shares – 72.19 million in number – will be issued at a unit price (0.06 euro) which represents not a discount – as during the majority of capital increases – but a premium compared to the Wednesday’s closing price. This up to about 58%, according to our calculations. The company explains that the premium drops to 18.8% compared to the weighted average price of the last 15 sessions preceding the meeting of the board of directors, on January 23.
Refocusing of the company
Mastrad explains that it has received subscription commitments, up to 75% of the planned issue, from the CEO, Mathieu Lion, and funds from the private equity firm NexstStage, partly in the form of debt compensation , i.e. the conversion of debt into capital.
The opening of the subscription period for the new shares will begin on January 31 and the settlement-delivery date for the new shares is scheduled for February 17, according to an indicative timetable.
The company estimates the net proceeds of this call for tenders at 3.2 million euros in the event that it raises only 75% of the amount envisaged (i.e. the commitments already received) and 4.29 million euros if it reaches 100%.
In addition to this capital increase, Mastrad has also decided to no longer directly operate its traditional products business – i.e. non-electronic products – whose revenues fell by 43% over the six months ended December 31, accounting for 54% of total sales.
“In order to stem the recurring losses generated by the sales of traditional (non-electronic) products, the group wishes to no longer operate this part of its activity directly and entrust its operation under license to a third-party company, controlled and managed by the ‘current managing director of the group’, Thibault Houelleu, explained the company.
An extended financial horizon
With this in mind, the company has signed an agreement in principle which includes several components. The company will sell the stocks relating to this activity of traditional products as they will appear from an inventory carried out on March 31, 2023. This sale will give rise to a payment in three installments estimated at approximately 900,000 euros in total. The agreement also includes a contract by which Mastrad will receive royalties based on the future sales of the products sold, in particular for brand royalties, copyrights and royalties.
The Orka SAS subsidiary, dedicated to the development and distribution of connected probes, will become the company’s sole operational entity. Mastrad explains that this company has, during the financial years ended June 30, 2020, 2021 and 2022 each time published a gross operating surplus above 22% of turnover and a net result exceeding 16% of income.
In the end, the company indicates that these operations will enable it to extend its cash flow horizon to more than twelve months, even in the event that its capital increase is subscribed to only 75% of the targeted amount. Before these operations, this horizon was limited to next February…
On the Paris Stock Exchange, the Mastrad share jumped 59.37% to 0.06 euro stack in reaction to this information.
©2023 BFM Bourse
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