Home Deals MGM Wireless borrows $2m to fund growth
MGM Wireless borrows $2m to fund growth Supplied

Australian-listed technology firm MGM Wireless, which is known for its SPACETALK children's smartphone watch, has entered into a convertible note deed with clients of Australia's Gleneagles Securities to raise up to $2 million of debt funding.

The company said in a statement that raising of the funds would be subject to shareholder approval which would be sought at its annual general meeting in November.

The funds can be drawn in two tranches of $500,000 each and four tranches of $250,000.

The drawdowns are conditional on the volume-weighted average price of the company's share price being greater than $3, with 15 days being allowed for the first drawdown and 30 days for subsequent drawdowns.



The share price was $3.03 at the time the note was announced and MGM has made the first drawdown of $500,000.

The following conditions are attached to the fund raising:

  • The conversion price will be the lower of $3.50 or at a 20% discount to any future shares issued;
  • Investors will have a right to convert at any time;
  • The company may issue a redemption notice at any time, but investors have a preferential right to convert within the notice period;
  • The term of the note is two years;
  • A total of 250,000 options will be issued pro-rata to investors as a facility fee. The options will expire two years from issuance and will be exercisable at $4. A further 300,000 options on the same terms will be issued to Gleneagle as part of its fee; and
  • The note is unsecured.

MGM Wireless chief executive Mark Fortunatow, said: “The note allows us to draw funds as we require them. It is unsecured at an attractive interest rate and doesn’t restrict us from raising additional debt or equity. We are confident the conversion price will be $3.50, which is a significant premium to the last traded price of $3.10.

“We believe the note serves to minimise dilution, whilst we retain maximum funding flexibility. We continue to see strong demand for our SPACETALK watch and anticipate making announcements on new customers and bricks and mortar expansion in time for the Christmas selling season.

"As such, having the note in place gives us and our customers surety that we can continue to aggressively grow the company in the fast growing wearables category.”

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Sam Varghese has been writing for iTWire since 2006, a year after the sitecame into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

 

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