DVD rental group Quickflix will go back to the market with a new offer after its rights issue fell short by a considerable margin.
DVD rental group Quickflix will go back to the market with a new offer after its rights issue fell short by a considerable margin.
The company had acceptances for a 4-for-5 rights issue at 7.5 cents of $934,546, well below the $4.9 million that was possible.
Under a revised plan, Quickflix will offer shareholders a 1-1 rights issue at 5 cents to raise $4.1 million.
The company pointed at adverse market conditions for the impact on the level of interest.
Quickflix has closed its recent rights issue with applications received from shareholders
including directors for a total of $934,546.
The directors recognise that adverse stock market sentiment, in particular for small cap
stocks, may have impacted on the level of interest in the rights issue as priced despite
the positive progress of the Quickflix business and the favourable outlook for the
Company.
To enable the Company to continue its growth momentum as outlined in the rights issue
offer document, and to encourage a fuller level of participation by shareholders, the
directors have considered it appropriate to make a new offer to raise up to $4.1 million
via a non-renounceable rights issue on revised terms (New Offer). Under the New Offer,
the Company will be offering eligible shareholders the opportunity to acquire fully paid
ordinary shares on the basis of one new share for every share held at the record date
which is expected to be 16 May 2008. Under the New Offer, Shares will be offered at 5
cents per Share, a 33% discount to the previous offer.
All shareholders who applied for shares at 7.5 cents in the rights issue which closed this
week will be offered the option to either have all or part of their applications applied
against the New Offer or withdraw their applications.
The business has achieved strong growth in subscriber numbers over the past 12 months
and has delivered improved service levels, subscriber retention and significantly
reducing cash burn as its achieved critical mass. The number of paying subscribers has
continued to grow over the past month, increasing to 25,548 at 30 April 2008. Additional
funds raised under the New Offer will build on this growth momentum.
