MEDIGARD RIGHTS ISSUE TO RAISE $4.8M
Written on the 9 August 2010
LISTED medical technology company Medigard (MGZ) has launched a rights issue for shareholders as it undertakes a $4.8 million capital raising to manufacture its blood collection device in the US.
Medigard will offer existing shareholders 74,406.091 new shares at 6.5c with an attached option for 9.5c if exercised before June 30, 2011.
The company needs to raise at least $1.57 million to get the US manufacturing process underway.
CEO Peter Emery, says the capital will inject additional funds into R&D, IP and working capital.
“That’s what we need in the very minimum just to get the tooling completed on the blood collection device,” he says.
“The $4.8 million is deliberate to give our own investors an opportunity under the rights issue. We believe it’s a pretty attractive offer.”
A cornerstone US investor is also being sought to propel the company to the next stage of production.
Emery expects to see revenues within 18 months with up to US$40m annual revenue forecast over a five year period following a recent deal with distributor Outcome Solutions and an undisclosed manufacturer.
The initial agreement is to supply a minimum 10 per cent of 700 million BCDs consumed by the US market per year. Four other Medigard products will also be put into production under the agreement.
The company chose the US over Asian export markets to ensure the quality of the products is maintained.
“Through selecting the right manufacturer, we will be able to deliver a price competitive product that is also of the highest quality, which will be of key importance to our success in the US market,” says Emery.
“These two key agreements we have been working towards for some time and are the culmination of months of negotiation, personal visits and the necessity of building key relationships.
“Both of our partners are commercially savvy and experienced operators and we look forward to working with them not only on the BCD, but also in development and production of our pipeline of products starting next with our 3mL syringe.”
MGZ shares rose 33.33 per cent today to $0.12.