Shares in KMD Brands Ltd (ASX: KMD) remain in a trading halt four business days after the company first asked that trading be halted, amid rumours that it is struggling to finalise a capital raise.
The retail brands owner, which operates the Rip Curl and Kathmandu brands, first asked that its shares be placed in a trading halt on March 25, saying it was planning to raise new capital, as well as release its first-half results to the market.
The original trading halt was meant to be in place until Friday.
The company said at the time:
KMD notes that it is effectively conducting an extended book build for a private placement, and there is a risk of material information leaking ahead of the formal announcement of the capital raise. KMD is not presently in a position to make a further announcement regarding the capital raise as the final details are still being determined.
On Friday, the company asked that the suspension of its shares be extended to Monday morning, but then on Monday, it asked for a voluntary suspension of its shares until Tuesday morning.
The company also said at this time it was looking to refinance its existing bank facilities.
While the company has not given any hint as to the size of the capital raise, The Australian was reporting on Monday that KMD was after about NZ$100 million, but was struggling to secure that number, with only about NZ$30 million in commitments so far raised.
The Australian report said that the company was looking to raise funds in the form of preferred securities, which combine features of both equity and debt.
Image source: Getty Images
Recent transaction rejected
KMD Brands also last week rejected a deal from US company Stokehouse to buy Rip Curl.
That deal would have involved demerging Rip Curl into a separate entity to be listed on the Australian and New Zealand share markets.
KMD said regarding the proposed deal:
Stokehouse proposed that after the de-merger of Rip Curl from KMD Brands, and its merger with Stokehouse, Stokehouse shareholders would own 22% of the merged entity. This proposed ownership structure is misaligned with the earnings delivered by the Stokehouse and Rip Curl businesses given Stokehouse's immaterial contribution to combined EBITDA, and would unfairly dilute KMD Brands shareholders. In addition, Mr. Naude, the current CEO of Stokehouse, would be Chief Executive of the combined business, and he would lead the business from California.
KMD Brands shares last changed hands for 15.5 cents, which was a 12-month low for the stock.
The company is valued at $110.3 million.
