The market has welcomed the brutal honesty of Anthony Maslin, Chairman of Wide Open Agriculture (ASX: WOA), who took to LinkedIn to explain the food production company’s heavily discounted cap raise as the only alternative to entering voluntary administration.
Yesterday, Wide Open Agriculture announced it would raise $10 million at $0.02 per share, despite WOA shares having last traded at $0.083 before the capital raise was announced.
“The story behind this is that we were completely out of money and about to enter voluntary administration. What led us to this point was a number of external factors (and some internal) that meant the sale of Dirty Clean Food and the launch of a capital raise was delayed,” Maslin posted.
“To spell out what these factors were will only sound like blame and excuses. So as Chair of the company, I’d prefer to take responsibility. I’d like to personally apologise to our shareholders for the position we found ourselves in.
“For the company however, this is an incredibly positive development. WOA now has the cash that buys the time to fill our sales pipeline – which we are confident we will. We also have the singular focus to do it, and will be as “lean and mean” as we possibly can.”
Taking to the social networking platform, Maslin laid it bare that shareholders who he knew would be frustrated by the capital raise, but was the only alternative to losing everything.
“The food industry is slow moving and opaque – but the feedback we continually receive on our Lupin Protein Isolate Buntine Protein product fills us with confidence. We have just seen the first small sales trickle through, and our pipeline of design wins gives us the confidence to know there is [sic] much larger orders to come.
“For shareholders, they have the choice to sell at a loss (which they wouldn’t have had if we’d gone into administration), hold their shares, or buy some more at 2c per share (an Enterprise Value of $3.5m).
“Any of these alternatives are better than the alternative we faced, so I feel secure in the knowledge that we have acted in the best interests of all shareholders.”
Given the frankness of Maslin’s commentary, none of it was included in Wide Open Agriculture’s formal ASX announcement, but the Chairman’s commentary has been well received by shareholders who have muted any on-market sell down.
Where WOA shares would typically plunder to the $0.02 capital raise price, shareholders appear to be backing Maslin and his team’s turnaround strategy. WOA shares closed yesterday at $0.029.
While these prices are a long way from the $1.00 range the Perth-based company was trading around in 2021, the Company is committed to growing the value chain of its Buntine Protein range of products.
According to the Company, Buntine Protein is a revolutionary climate-conscious, plant-based protein derived from lupins grown in West Australia. Manufactured under a globally protected patent, Buntine Protein® is a versatile ingredient used to create plant-based dairy, meats, baked goods, and protein supplements.
Shares issued from the Tranche 1 ($4.2 million) of the capital raise are scheduled to be issued on 13 May 2024 with Tranche 2 ($6.3 million) to be issued on 21 June 2024 pending shareholder approval.
As of 31 March 2024, Wide Open Agriculture had $611k of cash on hand.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, bloodstock enthusiast and former Analyst.
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