Magnolia to raise $5m

Perth-based Magnolia Resources has engaged two brokers to undertake a $5 million capital raising as part of its reverse takeover of Canadian e-commerce company PDT Technologies.

Magnolia engaged Alto Capital and CPS Capital Group for the placement, which it will make at no less than 20 cents a share, as part of its compliance with ASX re-listing rules.

Magnolia is buying PDT in exchange for 54.1 million shares, which at the company’s last closing of 16.4 cents is valued at about $8.6 million.

The company will also issue about 36 million performance shares, which are subject to the achievement of certain milestones.

The deal was first announced in March, which gave Magnolia 60 days to complete due diligence on PDT.

Magnolia said the proceeds from the placement would be used to purchase PDT’s equity interests in its e-commerce software platform Whole New Home, and to accelerate commercialisation of WNH’s business model through an expansion into the North American home decorator e-commerce market.

 “The acquisition of WNH strategically diversifies and expands the operations of the company into the significant and fast growing global home design sector,” the company said.

Upon completion of the transaction, WNH founder Neil Patel will become managing director of the new company, while current directors Cameron Pearce and Travis Schwertfeger will resign.

“The company is currently in discussions with other potential directors, and intends to finalise these discussions prior to dispatch of the notice of meeting,” Magnolia said.

The company plans to be reinstated on the ASX under its new name and business model on July 21.

Shares in Magnolia were 24.2 per cent higher to 20.5 cents a share at 1:45pm.