Pig Farm - Nikolovo AD raising BGN 1m through a warrant issue on the Bulgarian Stock Exchange (BSE) (10.01.2014)
Pig Farm - Nikolovo AD is planning to motivate its management by introducing equity compensation for good performance into their pay structure. The company is going to issue warrants for BGN 1m. A part of the securities will be distributed between top and middle management and will be tradable on the BSE. Mane Capital, the leading boutique investment bank in Bulgaria, will manage the warrant issue.
A total of 2.625m warrants will be issued with nominal value of BGN 0.41 each. If full subscription is achieved, the company will raise BGN 1.08m. At least 10% of the warrants have to be subscribed for the issue to be successful. The subscription rights will be issued to the company’s shareholders, who can use them, or to acquire warrants after payment of the issue price or to sell them on the stock exchange. The ratio of rights to warrants is 1:1. Subscriptions orders can be submitted to DISL Securities, an investment intermediary.
Ilian Scarlatov, managing partner of Mane Capital, said that the warrant issue is a result of the change in management, which occurred last year. Scarlatov assured that the company will continue investing in growth initiatives in the future. In May, Westpark Financial Group (Luxembourg) acquired 96.4% from the previous majority shareholder Laudis International and the minority shareholder KNT (10.4%). According to the Commercial Registry, the current owners of the company are Westpark Financial Group (32.28%), Pimaro Bulgaria (32%) and Hybrid (32.16%).
Pig Farm - Nikolovo AD’s stock was last trading at BGN 3.06 on the Bulgarian OTC market. After the change in management, the firm raised more equity, which was entirely financed with reserves. The warrant issue is the first attempt of the company to raise funds from the public. External investments will be a good indicator of the current market sentiment towards the management change, which occurred last year (although all warrants can be subscribed by the three current owners).
According to the company’s 2013 annual report, Pig Farm - Nikolovo AD made BGN 0.008m in consolidated net profit compared to BGN 0.326m in 2012. Total sales dropped from BGN 11.4m to BGN 8.2m in 2013. There is no significant change in debt levels - BGN 1.6m in long-term and BGN 2.5m in short-term debt.
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