PAZ Pharma Zen

[Langara]

$14 million just raised through a European investment fund at 40 cents a share. Interesting they didn’t come to their current shareholders. I guess they must get access to solid expertise to manage the huge growth potential ahead.
Ramp up of new facilities will be on a very large scale by the looks.

[iceman]

This is an interesting development. We've been pondering here that they may raise capital by bringing onboard one of their large suppliers, not a European investmend fund. I suppose we have to do a bit of reading up on the Cibus Fund now.

I am a bit surprised they are issuing the new shares at such a large discount to market price but have full faith in the management and Board to do the right thing.
The announcement is very bullish and I find these paragraphs of particular interest;

# Christchurch biotechnology company PharmaZen has raised $14.0 million from an international agri-technology fund to expand its operations amid surging global demand for its nutraceutical products. Its portfolio of ingredients covers joint, bone, muscle and digestive health, along with marine and bovine collagen and animal nutrition.

# PharmaZen is issuing the Cibus Fund 35 million new shares, equating to a 13.8% stake in the company, at 40 cents a share. The issue price, which represents a 13.1% discount to the volume weighted average price of the last 12 months, recognises the size of ADM Capital Europe’s investment and the significant expertise ADM Capital Europe offers in helping PharmaZen achieve its ambitions. (and a Board member)

# “Building capacity from cashflow and additional debt has made it a challenge keeping up with growth in demand. These funds provide us with the capacity to make transformative investments that will future-proof existing business growth opportunities while enabling us to accelerate future projects.”

# The Cibus capital will go into building a new 3,000 sqm production facility on PharmaZen’s recently purchased 1ha property in Rolleston. Construction of the facility is planned to begin in February and be operational August 2021. Once complete, it would house three more two tonne freeze dryers as well as new extraction facilities and an expanded marine collagen plant.
PharmaZen is also planning to exercise its option to purchase another hectare alongside the existing Rolleston site with plans for a further 3,000 sqm factory currently being designed with a scheduled build date of mid-2021. This new facility will be purpose built to house six two tonne freeze dryers specifically for high value pet products.


The last paragraph says they intend to build 2 new facilities at Rolleston and install 9 new two tonne freeze dryer. Holy crap is all I can say !! They sure are planning for some serious growth in the near future.

[Mr Slothbear]

Thanks for alerting me to this Iceman.

well sounds like things are going very well and happy with the capital plans but not so sure theres much benefit from having that fund on board unless theres synergies available they’re not telling us. Would have been happy with a supplier or distributor taking a position but would have prefered they asked us before just offering discounts to a fund.

[Baa_Baa]

Thanks for alerting me to this Iceman.

well sounds like things are going very well and happy with the capital plans but not so sure theres much benefit from having that fund on board unless theres synergies available they’re not telling us. Would have been happy with a supplier or distributor taking a position but would have prefered they asked us before just offering discounts to a fund.

Agree, first blush am disappointed with the choice of new shareholder, the raise discount to market and the dilution, the amount raised would appear to be within reach of existing shareholders. Is this showing a lack of experience in capital management/raisings? Bear in mind 2019/20 saw a significant run up in SP, clearly signs of confidence and some substantial money, surely they should've come to existing shareholders with a cunning plan and given the opportunity to further support the company, or avoid the dilution.

Keen to hear what other shareholders think.

[iceman]

For the record I agree with you Baa Baa and Slothbear. I think existing SH should have been offered to participate pro-rata to avoid dilution. But I want to find out more about this fund and what it is that PAZ management and Board have taken into account that we do not know about and is not at all clear in the announcement.

p.s. Interestingly the only sell offer on the USX that has been sitting there for awhile, has disappeared and no offers available now.

[Beat the Bank]

Agree, first blush am disappointed with the choice of new shareholder, the raise discount to market and the dilution, the amount raised would appear to be within reach of existing shareholders. Is this showing a lack of experience in capital management/raisings? Bear in mind 2019/20 saw a significant run up in SP, clearly signs of confidence and some substantial money, surely they should've come to existing shareholders with a cunning plan and given the opportunity to further support the company, or avoid the dilution.

Keen to hear what other shareholders think.

As a newcomer at around 55cents, I am very disappointed at the price. I hope they are bringing something else to the table. A local fundraising would have lifted their profile and brand awareness. Time will tell. I will stick with it but am more cautious now

[whatsup]

With todays ann I wonder who would be game to put up any shares on offer and @ what price?

[percy]

The capital raised together with retained earnings will see production triple over the next couple of years.
Strengthens the balance sheet,and means PAZ can get on with all their capital projects.
Cibus Capital have spent a lot of time [about a year] doing audits,not just financial.They have access to expertise and good world wide contacts.
Exciting being in the right company, in the right sector, at the right time.

[whatsup]

The capital raised together with retained earnings will see production triple over the next couple of years.
Strengthens the balance sheet,and means PAZ can get on with all their capital projects.
Cibus Capital have spent a lot of time [about a year] doing audits,not just financial.They have access to expertise and good world wide contacts.
Exciting being in the right company, in the right sector, at the right time.

Could there be an outside chance that we could be offered a SPP.

I asked at the virtual meeting of the chance of a C R , answer was not at present, I guess that was then and this is NOW !! DAMM !.

[percy]

Could there be an outside chance that we could be offered a SPP.

I asked at the virtual meeting of the chance of a C R , answer was not at present, I guess that was then and this is NOW !! DAMM !.

I very much doubt it.
This capital injection,together with retained earnings, will fund PAZ's capital program,which I take will be approx $25mil.
Freight inwards and outwards remains a world wide issue.
Had PAZ not raised the capital they would have had to take on a lot of debt.With freight issues, such as 12 containers for one imported freeze drier, and other factory equipment being held up, it would have possibly put them under financial pressure.
I think they did look at either raising capital from shareholders,debt or bringing in a supplier.However they did see a lot of benefits having Cibus onboard.
As we know the directors own nearly 50% of the company,so have the owner's eye.