Struggling women’s fashionwear retailer Mosaic Brands, owners of chains such as Non-B, Miller, Rockmans and Rivers has confirmed the details of its proposed capital raising after a delay over the weekend in a move that ended up being cheered by investors.
The key part of the raising will see the privately retail giant Spotlight of Melbourne taking a $10 million interest in Mosaic via a convertible note issue.
The shares slumped more than 16% to an 18-month low of 38 cents when details of the capital raising were released and trading resumed at 12.30 pm on Monday as investors bailed out terrified the recapitalisation would be bad.
But second and thirds thoughts saw a turnaround in sentiment and the shares bounced more than 19% to 54.5 cents.
Mosaic told the ASX on Monday it would look to raise $32 million via a convertible note raise, $10 million of which would be issued via a strategic placement to Danfin Pty Ltd, a subsidiary of Spotlight Group.
The remaining $22 million will be offered to shareholders in a pro-rata non-renounceable entitlement offer. Shareholders will receive one share for every 4.39 they own.
Mosaic is undertaking a capital raise to bolster its working capital levels to get through the current New South Wales and Victorian COVID-19 lockdowns, which have caused significant uncertainty for the business and seriously disrupted trading.
“Following completion of the offers, Mosaic Brands expects to be well funded through the current period of disrupted trading, based on conservative assumptions around lockdown easing measures and timing of stores re-opening,” the company said.
Mosaic Brands said it will have pro forma cash (as at 27 Jun 2021) of approximately $88.1 million after completion of the Offers.
Spotlight has annual sales of more than $4 billion across a number of national chains.
It operates fabric and craft store chain Spotlight, outdoor retailers Anaconda and Mountain Designs, and department store group Harris Scarfe.
