Covata has raised A$1.5m from a share placement and is also targeting a raise of up to A$1.8m from an ongoing entitlement offer. The company intends to use the proceeds to strengthen its sales and technical resources in Europe, for product development and for general working capital. The recently acquired dataglobal data classification technology should be available to use in Covata solutions from Q119.
Covata |
Funding the European opportunity
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13 June 2018 |
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Covata is a research client of Edison Investment Research Limited |
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Covata has raised A$1.5m from a share placement and is also targeting a raise of up to A$1.8m from an ongoing entitlement offer. The company intends to use the proceeds to strengthen its sales and technical resources in Europe, for product development and for general working capital. The recently acquired dataglobal data classification technology should be available to use in Covata solutions from Q119.
Placement completed, entitlement offer underway
Covata has placed 53.6m shares at A$0.028 with institutional shareholders, bringing in gross proceeds of A$1.5m. For every three new shares placed, shareholders received one option (exercise price A$0.055, exercisable by 6 June 2020). The company has also launched an entitlement offer, whereby shareholders can subscribe for one share at A$0.028 for every 11 shares held (maximum number of shares to be issued: 64.064m). Shareholders who subscribe will be given one option for every three new shares, on the same terms as the placement options. Full take-up of the entitlement offer would result in gross proceeds of A$1.79m. The ex-rights date is 13 June, the closing date is 28 June and the new shares are due to be issued on 5 July.
Proceeds to fund European sales & product development
The recent strategic alliance with dataglobal, as well as the implementation of GDPR, has opened up more opportunities for Covata in Europe, particularly in the DACH region. Integration of dataglobal’s data classification technology into Covata’s solutions is nearly complete and should be available from Q119. The company is keen to strengthen its sales and technical capability in Europe to take advantage of these new opportunities. The company is also looking to develop virtual data room (VDR) functionality based on its SafeShare platform, to build AI and machine learning tools for data classification, and develop a new tender/offer platform (SecureTender) for emerging markets. Proceeds are also expected to be used for general working capital purposes.
Tracking the milestones
There are no forecasts available; to track progress we continue to monitor contract wins, half-yearly order intake, cash burn and the development of the data security platform (DSP).
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Source: Covata |
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Research: Investment Companies
The Brunner Investment Trust (BUT) has recently announced a refinancing of its second (and last) tranche of high-cost debt (£28m). It placed a £25m note at a record low rate of 2.84% for 30-year debt, made possible due to declining UK government bond yields as a result of recent political concerns in Italy. The remaining £14.4m costs (including accrued interest) to repay the debt will be financed by existing assets and bank debt, and will meaningfully lower BUT’s overall weighted average interest costs from 7.7% to 2.9% pa. Manager Lucy Macdonald describes this as an exciting development, as it will allow the trust to have a more efficient balance sheet and provides greater flexibility to increase the dividend in real terms. Coupled with the lower cost of debt, a potentially higher yield could lead to a narrowing in the trust’s discount. BUT has a distinguished distribution track record, growing dividends for the last 46 consecutive years.