08/04/2015 - 11:54

Rubianna to leave resources with backdoor deal

08/04/2015 - 11:54

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Shares in gold explorer Rubianna Resources skyrocketed on news it plans to exit the resources industry by acquiring a young cloud-based retail finance business.

Rubianna to leave resources with backdoor deal

Shares in gold explorer Rubianna Resources skyrocketed on news it plans to exit the resources industry by acquiring a young cloud-based retail finance business.

Under the terms of the deal, Rubianna will issue NSW-based zipMoney Holdings 550 million ordinary shares and 350 million performance shares at a deemed issue price of 1.25 cents each to wholly acquire the business, equal to about $11.3 million, and will adopt zipMoney’s business model.

The performance shares are subject to certain milestones being achieved.

zipMoney chief executive Larry Diamond said the business had originated about $3 million in loans through its network of over 100 merchants to over 3,500 consumers since launching the platform last year.

Rubianna will need to comply with ASX listing rules by satisfying a number of conditions, including completing a $4 million capital raising, to begin trading on the ASX under a new name that reflects the zipMoney brand.

It will also complete a $965,000 rights issue, with the majority to be loaned to zipMoney to fund general working capital requirements.

Two zipMoney nominees will also be appointed to the new company’s board, leaving one position open for a nominee from Rubianna.

“It has become clear that current market conditions make it very difficult to raise funds to explore the exploration projects which the company holds,” Rubianna said in a statement.

“The board has therefore assessed a number of opportunities to enhance shareholder value. We believe the proposed transaction with zipMoney is an excellent opportunity for the company.”

The deal is subject to a number of conditions, including shareholder approval and Rubianna disposing of all tenements it currently holds.

It will also be required to provide a $2 million debt facility to zipMoney to fund the company’s loan book.

If the acquisition is successful, Rubianna will issue an additional 400 million performance shares to members of its executive management team, 200 million performance shares to the providers of a financing facility, and 33 million ordinary shares and 47.7 million performance shares to Avitus Capital for the provision of corporate advisory services.

Rubianna has given itself five months to complete the acquisition and re-list on the ASX by September 5.

Rubianna shares were up 150 per cent to 2.5 cents per share at 12pm.

Click here to see our analysis of backdoor listings in WA.

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