Highlights
- A$24.9M private placement received strong demand from Australian, Canadian and overseas institutional investors, as well as existing shareholders
- Company to undertake a share purchase plan to eligible existing shareholders under the same offer price as the placement to raise up to an additional A$5M
- Completion of Costa Fuego pre-feasibility study, expected in H2 2024
- Advance Water Supply Study and creation of new water company, expected in H2 2024
- Up to 25,000m of drilling, exploration and further land consolidation over next 18 months
- Commencement of a bankable feasibility study over next 18 months
Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) announced that it has successfully arranged a A$24.9 million private placement to institutional and professional investors through the issue of 24,900,000 new fully paid ordinary shares (“Shares”) at an offer price of A$1.00 per Share (the “Placement”).
Veritas Securities Limited and Cormark Securities Inc. acted as joint lead managers (together, the “JLMs”), and BMO Capital Markets and Beacon Securities Limited acted as co-managers to the Placement. The Placement received strong demand from Australian, Canadian, and overseas institutional and other investors as well as existing shareholders.
In addition to the Placement, the Company will offer to all eligible shareholders the opportunity to participate in a Share Purchase Plan (“SPP”) to raise up to A$5 million at the same offer price as the Placement (A$1.00 per Share).
The Placement and the SPP aim to increase Hot Chili’s trading liquidity on the TSXV and provide all of the Company’s eligible shareholders with access to the same offer price.
Proceeds from the Placement and SPP, in addition to existing treasury, will provide up to 18 months funding to be used for the completion of the Costa Fuego Pre-Feasibility Study, completion of the Water Supply Business Case Study, completion of the Costa Fuego Environmental Impact Assessment, ongoing exploration, drilling and consolidation activities, and for general working capital purposes.
Details of the Placement
The Company has arranged a Placement of 24,900,000 Shares to raise A$24.9 million (before costs). The Placement will be completed in Australia under an offer to investors who qualify as professional or sophisticated investors under sections 708(8), (10) and (11) of the Corporations Act 2001 (Cth), and in Canada by way of private placement in reliance on the “listed issuer financing exemption” from the prospectus requirements (the “LIFE Exemption”) available under Part 5A of National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”) in each of the provinces and territories of Canada, other than Quebec, for aggregate gross proceeds of C$6,897,500 (A$7,750,000) or 7,750,000 Shares (the “Canadian Offering”). The Shares issued pursuant to the LIFE Exemption under the Canadian Offering will not be subject to a hold period pursuant to applicable Canadian securities laws. There is an offering document related to the Canadian Offering that can be accessed on SEDAR+ (www.sedarplus.ca) under the Company’s profile and on the Company’s website at www.hotchili.net.au. Prospective investors in the Canadian Offering should read the offering document before making an investment decision.
The Shares under the Placement may also be offered in the United States pursuant to available exemptions from the registration requirements of the United States Securities Act of 1933, as amended, (“1933 Act”), and applicable state securities laws, and in those other jurisdictions outside of Australia, Canada and the United States provided it is understood that no prospectus filing or comparable obligation, ongoing reporting requirement or requisite regulatory or governmental approval arises in such other jurisdictions.
The new Shares will be issued within the Company’s 25% placement capacities under Australian Securities Exchange (“ASX”) listing rules 7.1 and 7.1A.
Shares under the Placement will be issued at a price of A$1.00 (C$0.89) each and will rank equally with all other Shares currently on issue. The issue price of A$1.00 per Share represents an approximate 20% discount to the Company’s last closing price and an approximate 18.6% discount to the 10-day volume weighted average price of Hot Chili shares traded on ASX prior to the Company entering into a trading halt on 1 May 2024.
The issue of the Shares under the Placement is expected to occur on 9 May 2024, or on such other date as the Company and the JLMs may agree.
Details of the Share Purchase Plan
In addition to the Placement, Hot Chili will offer existing eligible shareholders (“Eligible Shareholders”) with a registered address in Australia or New Zealand who were holders of Shares on the ASX at 5.00pm (WST) on Friday, 3 May 2024 (“Record Date”), the opportunity to subscribe for up to 5,000,000 new Shares (“SPP Shares”) at the same price as the Placement (being A$1.00 per Share) by way of an SPP offer without incurring brokerage fees to raise up to A$5 million (“SPP Offer”).
Eligible Shareholders will have the opportunity to apply for up to A$30,000 worth of SPP Shares. The SPP Shares will rank equally with Hot Chili’s existing Shares on issue. Hot Chili retains the right to accept oversubscriptions or to scale back applications (in whole or part) at its absolute discretion, which may result in the SPP raising more or less than A$5 million. Hot Chili also reserves the right to place any shortfall under the SPP (at the same issue price), within its placement capacity under ASX Listing Rule 7.1.
Full details of the SPP Offer, including the terms and conditions of the offer, will be set out in the SPP offer document, which is expected to be released to the ASX and dispatched to Eligible Shareholders on or around Friday, 10 May 2024. The Company reserves the right to vary the terms of the SPP without notice. Eligible Shareholders should review the SPP Offer terms and conditions in full before deciding whether or not to participate in the SPP.
The SPP Offer period will open on Friday, 10 May 2024 and is expected to close at 5.00pm WST on Friday, 24 May 2024.
Indicative Timetable for Placement and SPP Offer*
Hot Chili is a Marketing Awareness Client of Capital 10X. See disclosures for more details.
