Why the Mosaic Brands (ASX:MOZ) share price is shooting 16% higher

It has been a good day for Mosaic Brands…

| More on:
Two fashionable asx investors dancing among confetti.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mosaic Brands Ltd (ASX: MOZ) share price has been a very strong performer on Tuesday.

In morning trade, the retailer's shares are up 16.5% to 63.5 cents.

Why is the Mosaic Brands share price shooting higher?

Investors have been bidding the Mosaic Brands share price higher today after it secured its future via an underwritten capital raising.

This morning the company announced an underwritten $32 million capital raising via the issue of convertible notes. This comprises a $10 million strategic placement of notes to Danfin Pty Ltd and a $22 million 1 for 4.39 pro-rata non-renounceable entitlement offer of notes to eligible shareholders.

The aforementioned notes will be secured by a second-ranking security behind the existing Australia and New Zealand Banking GrpLtd (ASX: ANZ) facility. Positively, the release advises that ANZ has provided consent to the issue of the notes.

Why is the company raising funds?

Mosaic Brands is raising funds for general working capital purposes and to provide the business with additional balance sheet support until COVID-19 related lockdown measures are eased and stores re-open for trade.

Following the completion of the capital raising, Mosaic Brands expects to be well funded through the current period of disrupted trading. This is based on conservative assumptions around lockdown easing measures and the timing of stores re-opening.

In addition, Mosaic Brands intends to exercise its option for the remaining shares in Ezibuy during September. Payment terms for the $11 million acquisition consideration are proposed to be extended from 31 December 2021 to provide additional balance sheet flexibility. Mosaic Brands would have up to 30 June 2022 to settle the exercise price.

Mosaic Brands notes that it will have pro forma cash of approximately $88.1 million post completion of the offers.

The Mosaic Brands share price is down 23% in 2021 despite today's strong gain.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors regained some confidence on the stock market today.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Baby Bunting, Bellevue Gold, Cettire, and New Hope shares are rising today

These ASX shares are having a good session. But why are investors buying their shares?

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Gainers

Here are the top 10 ASX 200 shares today

It was a shaky, but positive start to the trading week for ASX shares today.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Bannerman Energy, Cettire, TechnologyOne, and Zip shares are charging higher

These ASX shares are having a great start to the week. But why?

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
Share Gainers

If I'd put $5,000 into Zip shares on 9 October, here's what I'd have now!

The stars have been aligning for Zip shares.

Read more »

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was an awful end to the trading week for ASX investors this Friday.

Read more »

A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.
Share Gainers

Why Beach, Clinuvel, Deep Yellow, and EML shares are charging higher today

These ASX shares are ending the week strongly. But why?

Read more »

Man smiling at a laptop because of a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a fairly miserable day on the share market this Thursday.

Read more »