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  • Wattle Health Australia (WHA) has missed out on $50 million in its latest bout of capital raising
  • The baby formula specialist planned to raise $62 million through a four-for-five rights issue
  • Wattle, however, pocketed less than $12 million from investors
  • This means the planned purchase of a 75 per cent stake in Blend and Pack is now up in the air
  • The company is working with current owner Mason Financial to come to an alternate agreement
  • Shares in Wattle were suspended by the company in late September 2019 and are yet to reopen

Investors in baby formula specialist Wattle Health Australia (WHA) have flaunted their frustration at the company with their wallets.

Wattle’s latest bout of capital raising came up more than $50 million short as the company failed to keep investors interested.

In mid-November 2019, the company launched a four-for-five rights issue at 40 cents per share with plans to raise $62.2 million. Though the raise was underwritten to $20 million by Claymore Capital, Wattle pocketed just under $12 million from investors.

The majority of the new funds was planned to help Wattle ramp up its stake in canning company Blend and Pack (B&P) to 80 per cent. Wattle already held a five per cent interest in the company but told investors back in February it was planning to buy up another 75 per cent for $78 million (US$55 million)

However, throughout 2019 the financing structure to buy B&P was rejigged several times. Furthermore, with all of the finance shuffling and board changes, Wattle’s shares went into voluntary suspension in late September and have yet to reopen.

As such, November’s bold decision to almost double total shares on offer and tap investors for some more cash was a serious test of shareholder mettle. Wattle’s Board said it had carefully considered the risks involved.

“The WHA Board acknowledges that this is a potentially dilutive event for existing shareholders who don’t take up their entitlements, and as such the decision to move away from the all debt finance arrangement previously proposed was not taken lightly. The Board does believe it is in the best interests of both the company and its existing shareholders,” November’s announcement to the ASX said.

And though the company took the risk, it seems to have missed out on the biscuit today.

Wattle said the outcome of the rights issue is “very disappointing” and it will now do its best to work out an alternate arrangement and potential purchase extension with B&P’s current owner, Mason Financial Holdings.

“This extension would allow both parties to further negotiate on a potential amended proposal in light of the circumstances arising from the outcome of the rights issue offer. It should be noted that there is no guarantee that a new agreement can be reached with Mason,” the company said today.

In light of today’s news, Wattle shares will remain tightly locked up by company management. They last traded on September 27 for 53 cents each.

WHA by the numbers
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