Sports betting and igaming operator and provider Newgioco is seeking to raise net proceeds of at least $9.2 million through a share offering so as to settle outstanding debts and also accumulate working capital and/or general corporate purposes.
The business will provide 3,623,188 units, including of one ordinary share as well as one warrant to buy a share for $3.45 per share in the next 5 years at a price of $2.76 per unit. The business may opt to increase or decrease the number of units sold or the price offered.
The unit price is set based on the price of a Newgioco share at the close of Nasdaq Capital Market trading on July 23, while the warrant purchase price is set at 125% of this amount.
The target of $9.2 million is based solely on the sales of the shares themselves rather than the warrants, as these might never be exercised. In case they are exercised, they may rise up to an extra $11.5 million before costs, bringing the overall amount raised to over $20 million.
Newgioco said it will use about $2.9 million of this amount towards paying off $2.4 million in principal amounts and $443,000 in interest toward its debts, which carry interest of 10% per year. The rest of the amount will be directed towards “working capital and general corporate purposes”.
The firm added that it will have crucial flexibility in how it spends the money.
“The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business,” it said.
“Pending their use, we intend to invest the net proceeds of this offering in a variety of capital-preservation investments, including short-and intermediate-term, interest-bearing, investment-grade securities and government securities.”
This past week, Newgioco revealed a year-on-year rise in revenue for Q1, while the business was additionally able to make a net profit during the period.
Net gaming revenue for the 3 months through March 31 amounted to $10.2 million (£8.0m/€8.8m), representing an increase of 9.7% from $9.3 million in the corresponding period last year.
The release of the quarterly results comes after Newgioco wa earlier this month cautioned by the Listing Qualifications Department of the Nasdaq stock exchange after it failed to publish the results in time.